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# OPERATIONS PLANNING I

## PROF ASHIS CHATTERJEE

OPERATIONS PLANNING I
CLASSIFICATION OF PLANNING
(Based on Time)
•Long Range Planning : Planning Horizon
typically 5-10 years.
•Intermediate Range Planning : Planning
Horizon typically 1 year.
•Short Range Planning : Planning Horizon
less than 1 year.

## PRODUCTION PLANNING by definition would

constitute planning for production/operations for
the upcoming year.
PRODUCTION PLANNING
The Production Planning Problem may be
further classified based on the demand.

## • Demand Static and Deterministic :

Product-Mix Problem

## • Demand Dynamic and Deterministic:

Aggregate Production Planning Problem.
PRODUCT MIX PROBLEM
AN EXAMPLE:
A Manufacturer of two types of designer chairs is interested
in determining the mix of products it should manufacture in
the next period. Both types of chairs need to pass through
the carpentry (C) and assembly (A) Dept. An unit of Type1
requires 0.4 hrs, & 0.5hrs, for C, & A, respectively; Type 2
requires 0.5 & 0.3 hrs for C, & A, respectively. In the next
period 316 hrs & 354 hrs of C & A Dept.’ s time will be
available for production. The contribution per unit of the two
products Type 1 and Type 2 are Rs. 50 & 40 respectively and
one may assume that the Manufacturer can sell all that he
produces in the next period.
PRODUCT MIX PROBLEM cont.

FORMULATION:
Maximise 50X + 40Y
Subject to 0.4X + 0.5Y ≤ 316
0.5X + 0.3Y ≤ 354
X, Y ≥ 0
AGGREGATE PRODUCTION
PLANNING PROBLEM
EXAMPLE: Determine the minimum cost
production plan. Reqd. data is given below:
Jan Feb Mar
Demand 100 75 125
RT Cap 100 100 100
OT Cap 25 25 25
Relevant cost: RT cost/unit Rs.100
OT cost/unit Rs.125
ICC/unit/period Rs. 5
AGGREGATE PRODUCTION
PLANNING PROBLEM cont.
FORMULATION:
Decision variables:
X1= no. of units to be produced in Jan RT
Y1 = no. of units to be produced in Jan OT
X2= no. of units to be produced in Feb RT
Y2 = no. of units to be produced in Feb OT
X3= no. of units to be produced in Mar RT
Y3 = no. of units to be produced in Mar OT
I1 = inventory at the end of Jan
I2 = inventory at the end of Feb
I3 = inventory at the end of Mar
AGGREGATE PRODUCTION
PLANNING PROBLEM cont.
FORMULATION cont.:
Minimise [100(X1+X2+X3) + 125 (Y1+Y2 +Y3)
+ 5(I1+I2+I3) ]
Subject to X1+Y1 - I1 = 100
I1+X2+Y2 - I2= 75
I2+X3 +Y3 -I3 = 125
X1, X2, X3 ≤ 100
Y1, Y2, Y3 ≤ 25
X1, X2, X3 , Y1, Y2, Y3 , I1, I2, I3 ≥ 0
AGGREGATE PRODUCTION
PLANNING PROBLEM cont.
PLAN 1:
Jan Feb Mar
RT 100 100 100
OT 0 0 0
PLAN 2:
Jan Feb Mar
RT 100 75 100
OT 0 0 25
Tradeoff: Produce an unit in RT and carry it over as
inventory for T periods as against producing the
same unit in OT
PRODUCTION PLANNING
STRATEGIES (PURE)
• Vary the number of productive employees
in response to varying output
requirements

## • Maintain a constant work force size but

vary the utilization of the work force

## • Vary the size of inventory in response to

varying demand
DETERMINING PRODUCTION
PLANNING STRATEGIES
LINEAR PROGRAMMING:
Formulate & solve the tyre example
HINTS:
Decision variables:
Each of the two products can be produced by two
different machines in any of the 3 months, giving rise
to a total of 12 variables. For eg. One may denote
NW1 as the no. of units of nylon (N) tyres to be
produced by wheeling (W) machine in June (say).
Are there any other type of Decision variables?
DETERMINING PRODUCTION
PLANNING STRATEGIES
Constraints:
• Availability of machine hours in any period.
In June the wheeling machine is available for only 700 hrs.
Each N & F tyre requires 0.15 and 0.12 hrs of wheeling
machine respectively. If NW1 & FW1 denote the production
in June of N and F using W, then 0.15NW1 + 0.12 FW1 ≤
700
• Material Balance Equation.
For every period and every product, one needs to ensure
that beginning inventory + amount produced - amount
demanded = ending inventory. For June for Nylon tyre,
Beg. Inventory = 0, if June end Inventory = IN1, then
NW1+NR1-IN1=4000
DETERMINING PRODUCTION
PLANNING STRATEGIES
• Transportation Method
Jan Feb Mar Cap
Jan RT 100
OT 25
Feb RT 100
OT 25
Mar RT 100
OT 25
Demand 100 75 125
DETERMINING PRODUCTION
PLANNING STRATEGIES
• DYNAMIC PROGRAMMING
Example: Demand forecast for the months Jan to
Apr are 5, 2, 3,4 units. The relevant
costs are,
(e) Production Cost = c(x) = 13+ 2 x, if x > 0
= 0 otherwise
(b) Inventory Cost = Rs.1/unit levied on the end of
month inventory.
Determine the minimum cost production plan.
PLANNING FOR DIFFERENT TYPES
OF PRODUCTION PROCESSES

## • For mass production system

Concept of Line production : When all units
are passing through the same sequence of
operations, the station taking the maximum
time governs the output rate, and is defined
as the bottleneck.
MASS PRODUCTION SYSTEM
• Consider the following two activities:
1.Collating 6 pages (2mins.)
2.Stapling the pages (1mins.)
Two persons are engaged in the two activities.
Assume that the product “stapled sheets” is
produced in high volume. Determine the capacity
of the system (maximum production per hour).
PLANNING FOR JOB SHOP
SYSTEMS
For Job Shop Systems where each product
may be required to be processed on
different machines in different sequences,
the identification of bottleneck is not
straightforward. Here the concept and
approaches of Job Shop Scheduling
assume importance.