agregate planning
TRANSCRIPT
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.
Alternatives
Quarter
1
2
3
4
TotalCapacity
UnusedCapacity
Requirements
Qua
rter
Subcontract
Overtime
Regular time
Subcontract
Overtime
Regular time
Subcontract
Overtime
Regular time
Subcontract
Overtime
Regular time
Beginning
inventory
1
2
3
4
Aggregate Aggregate PlanningPlanning
Chapter 14Chapter 14
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.
Planning RelationshipsPlanning Relationships
Figure 14.1Figure 14.1
Business Business or annual or annual planplan
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.
Planning RelationshipsPlanning Relationships
Figure 14.1Figure 14.1
Business Business or annual or annual planplan
Production Production or staffing or staffing planplan
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.
Planning RelationshipsPlanning Relationships
Figure 14.1Figure 14.1
MPS or MPS or workforce workforce scheduleschedule
Business Business or annual or annual planplan
Production Production or staffing or staffing planplan
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.
Planning RelationshipsPlanning Relationships
Figure 14.1Figure 14.1
MPS or MPS or workforce workforce scheduleschedule
Business Business or annual or annual planplan
Production Production or staffing or staffing planplan
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.
Planning RelationshipsPlanning Relationships
Figure 14.1Figure 14.1
MPS or MPS or workforce workforce scheduleschedule
Business Business or annual or annual planplan
Production Production or staffing or staffing planplan
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.
Managerial InputsManagerial Inputs
Figure 14.2Figure 14.2
Aggregate plan
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.
Managerial InputsManagerial Inputs
Aggregate plan
Customer needs Demand forecasts Competition behavior
Distribution and marketing
Figure 14.2Figure 14.2
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.
Managerial InputsManagerial Inputs
Cost data Financial condition of firm
Accounting and financeAggregate
plan
Customer needs Demand forecasts Competition behavior
Distribution and marketing
Figure 14.2Figure 14.2
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.
Managerial InputsManagerial Inputs
Labor-market conditions Training capacity
Human resources
Cost data Financial condition of firm
Accounting and financeAggregate
plan
Customer needs Demand forecasts Competition behavior
Distribution and marketing
Figure 14.2Figure 14.2
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.
Managerial InputsManagerial Inputs
New products Product design changes Machine standards
EngineeringLabor-market conditions Training capacity
Human resources
Cost data Financial condition of firm
Accounting and financeAggregate
plan
Customer needs Demand forecasts Competition behavior
Distribution and marketing
Figure 14.2Figure 14.2
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.
Managerial InputsManagerial Inputs
Supplier capabilities Storage capacity Materials availability
Materials
New products Product design changes Machine standards
EngineeringLabor-market conditions Training capacity
Human resources
Cost data Financial condition of firm
Accounting and financeAggregate
plan
Customer needs Demand forecasts Competition behavior
Distribution and marketing
Figure 14.2Figure 14.2
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.
Managerial InputsManagerial Inputs
Supplier capabilities Storage capacity Materials availability
Materials
Current machine capacities Plans for future capacities Workforce capacities Current staffing level
Operations
New products Product design changes Machine standards
EngineeringLabor-market conditions Training capacity
Human resources
Cost data Financial condition of firm
Accounting and financeAggregate
plan
Customer needs Demand forecasts Competition behavior
Distribution and marketing
Figure 14.2Figure 14.2
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.
Aggregate Planning Aggregate Planning ObjectivesObjectives
Minimize Costs/Maximize ProfitsMinimize Costs/Maximize Profits Maximize Customer ServiceMaximize Customer Service Minimize Inventory InvestmentMinimize Inventory Investment Minimize Changes in Production RatesMinimize Changes in Production Rates Minimize Changes in Workforce Minimize Changes in Workforce
LevelsLevels Maximize Utilization of Plant and Maximize Utilization of Plant and
EquipmentEquipment
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.
Aggregate Planning StrategiesAggregate Planning StrategiesTABLE 14.1 PLANNING STRATEGIES FOR AGGREGATE PLANS
Possible Alternatives Possible AlternativesStrategyduring Slack Season during Peak Season
4. Level #2: constant Layoffs, building antici- Hiring, depleting antici-output rate pation inventory, pation inventory, over-
undertime, vacations time, subcontracting, backorders, stockouts
1. Chase #1: vary workforce Layoffs Hiringlevel to match demand
2. Chase #2: vary output Layoffs, undertime, Hiring, overtime,rate to match demand vacations subcontracting
3. Level #1: constant No layoffs, building No hiring, depletingworkforce level anticipation inventory, anticipation inventory,
undertime, vacations overtime, subcontracting, backorders, stockouts
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.
Aggregate Planning ProcessAggregate Planning Process
Figure 14.3Figure 14.3
Determine requirements for planning horizon
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.
Aggregate Planning ProcessAggregate Planning Process
Determine requirements for planning horizon
Identify alternatives, constraints, and costs
Figure 14.3Figure 14.3
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.
Aggregate Planning ProcessAggregate Planning Process
Determine requirements for planning horizon
Identify alternatives, constraints, and costs
Prepare prospective plan for
planning horizon
Figure 14.3Figure 14.3
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.
Aggregate Planning ProcessAggregate Planning Process
Determine requirements for planning horizon
Identify alternatives, constraints, and costs
Prepare prospective plan for
planning horizon
Is the plan acceptable?
Figure 14.3Figure 14.3
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.
Aggregate Planning ProcessAggregate Planning Process
Determine requirements for planning horizon
Identify alternatives, constraints, and costs
Prepare prospective plan for
planning horizon
Is the plan acceptable?
NoNo
Figure 14.3Figure 14.3
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.
Aggregate Planning ProcessAggregate Planning Process
Determine requirements for planning horizon
Identify alternatives, constraints, and costs
Prepare prospective plan for
planning horizon
Implement and update the plan
Is the plan acceptable?
NoNo
YesYes
Figure 14.3Figure 14.3
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.
Aggregate Planning ProcessAggregate Planning Process
Determine requirements for planning horizon
Identify alternatives, constraints, and costs
Prepare prospective plan for
planning horizon
Move aheadto next
planning session
Implement and update the plan
Is the plan acceptable?
NoNo
YesYes
Figure 14.3Figure 14.3
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.
Aggregate Planning CostsAggregate Planning Costs
Regular-Time CostsRegular-Time Costs Overtime CostsOvertime Costs Hiring and Hiring and
Layoff CostsLayoff Costs Inventory Inventory
Holding CostsHolding Costs Backorder and Stockout CostsBackorder and Stockout Costs
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.
Level Strategy Level Strategy for Servicesfor Services
Dock Aisle
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.
Level Strategy Level Strategy for Servicesfor Services
DockDock AisleAisle
Example 14.1Example 14.1
TIME PERIODTIME PERIOD
11 22 33 44 55 66 TotalTotal
Requirement*Requirement* 66 1212 1818 1515 1313 1414 7878
Current employment = 10 part-time clerksCurrent employment = 10 part-time clerks * Number of part-time employees* Number of part-time employees
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.
Level Strategy Level Strategy for Servicesfor Services
DockDock AisleAisle
TIME PERIODTIME PERIOD
11 22 33 44 55 66 TotalTotal
Requirement*Requirement* 66 1212 1818 1515 1313 1414 7878
Current employment = 10 part-time clerksCurrent employment = 10 part-time clerks
1.1. No more than 10 new hires in any periodNo more than 10 new hires in any period2.2. No backorders are permittedNo backorders are permitted3.3. Overtime can not exceed 20% of regular-time capacityOvertime can not exceed 20% of regular-time capacity4.4. The following costs can be assigned:The following costs can be assigned:
Regular-time wageRegular-time wage $2,000/period at 20 $2,000/period at 20 hours/weekhours/week
Overtime wagesOvertime wages 150% of regular-time150% of regular-timeHiringHiring $1,000/person$1,000/personLayoffsLayoffs $500/person$500/person
* Number of part-time employees* Number of part-time employees
Example 14.1Example 14.1
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.
Level Strategy Level Strategy for Servicesfor Services
Dock Aisle
TIME PERIODTIME PERIOD
11 22 33 44 55 66 TotalTotal
Requirement*Requirement* 66 1212 1818 1515 1313 1414 7878
Current employment = 10 part-time clerksCurrent employment = 10 part-time clerks
1.1. No more than 10 new hires in any periodNo more than 10 new hires in any period2.2. No backorders are permittedNo backorders are permitted3.3. Overtime can not exceed 20% of regular-time capacityOvertime can not exceed 20% of regular-time capacity4.4. The following costs can be assigned:The following costs can be assigned:
Regular-time wageRegular-time wage $2,000/period at 20 $2,000/period at 20 hours/weekhours/week
Overtime wagesOvertime wages 150% of regular-time150% of regular-timeHiringHiring $1,000/person$1,000/personLayoffsLayoffs $500/person$500/person
Peak Requirement
Example 14.1Example 14.1
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.
Level Strategy Level Strategy for Servicesfor Services
Dock Aisle
TIME PERIODTIME PERIOD
11 22 33 44 55 66 TotalTotal
Requirement*Requirement* 66 1212 1818 1515 1313 1414 7878
Current employment = 10 part-time clerksCurrent employment = 10 part-time clerks
1.1. No more than 10 new hires in any periodNo more than 10 new hires in any period2.2. No backorders are permittedNo backorders are permitted3.3. Overtime can not exceed 20% of regular-time capacityOvertime can not exceed 20% of regular-time capacity4.4. The following costs can be assigned:The following costs can be assigned:
Regular-time wageRegular-time wage $2,000/period at 20 $2,000/period at 20 hours/weekhours/week
Overtime wagesOvertime wages 150% of regular-time150% of regular-timeHiringHiring $1,000/person$1,000/personLayoffsLayoffs $500/person$500/person
Peak Requirement
1.20w = 18 employees in peak period
Example 14.1Example 14.1
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.
Level Strategy Level Strategy for Servicesfor Services
Dock Aisle
TIME PERIODTIME PERIOD
11 22 33 44 55 66 TotalTotal
Requirement*Requirement* 66 1212 1818 1515 1313 1414 7878
Current employment = 10 part-time clerksCurrent employment = 10 part-time clerks
1.1. No more than 10 new hires in any periodNo more than 10 new hires in any period2.2. No backorders are permittedNo backorders are permitted3.3. Overtime can not exceed 20% of regular-time capacityOvertime can not exceed 20% of regular-time capacity4.4. The following costs can be assigned:The following costs can be assigned:
Regular-time wageRegular-time wage $2,000/period at 20 $2,000/period at 20 hours/weekhours/week
Overtime wagesOvertime wages 150% of regular-time150% of regular-timeHiringHiring $1,000/person$1,000/personLayoffsLayoffs $500/person$500/person
Peak Requirement
1.20w = 18 employees in peak period
w = = 15 employees18
1.20
Example 14.1Example 14.1
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.
Level Strategy Level Strategy for Servicesfor Services
Dock Aisle
Figure 14.4Figure 14.4
TIME PERIODTIME PERIOD
11 22 33 44 55 66 TotalTotal
Requirement*Requirement* 66 1212 1818 1515 1313 1414 7878
Current employment = 10 part-time clerksCurrent employment = 10 part-time clerks
1.1. No more than 10 new hires in any periodNo more than 10 new hires in any period2.2. No backorders are permittedNo backorders are permitted3.3. Overtime can not exceed 20% of regular-time capacityOvertime can not exceed 20% of regular-time capacity4.4. The following costs can be assigned:The following costs can be assigned:
Regular-time wageRegular-time wage $2,000/period at 20 $2,000/period at 20 hours/weekhours/week
Overtime wagesOvertime wages 150% of regular-time150% of regular-timeHiringHiring $1,000/person$1,000/personLayoffsLayoffs $500/person$500/person
Peak Requirement
1.20w = 18 employees in peak period
w = = 15 employees18
1.20
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.
Chase Strategy Chase Strategy for Servicesfor Services
DockDock AisleAisle
TIME PERIODTIME PERIOD
11 22 33 44 55 66 TotalTotal
Requirement*Requirement* 66 1212 1818 1515 1313 1414 7878
Current employment = 10 part-time clerksCurrent employment = 10 part-time clerks
Figure 14.5Figure 14.5
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.
Mixed Strategies Mixed Strategies in Manufacturingin ManufacturingFigure 14.6
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.
Production Production PlanningPlanningTableauTableau
Figure 14.7Figure 14.7
AlternativesQuarter
1 2 3 4
TotalCapacity
UnusedCapacity
Requirements
Qu
arte
r
Subcontract
Overtime
Regular time
Subcontract
Overtime
Regular time
Subcontract
Overtime
Regular time
Subcontract
Overtime
Regular time
Beginning inventory
1
2
3
4
0 h 2h 3h 4h
r r+h r+2h r+3h u
c c+h c+2h c+3h 0
s s+h s+2h s+3h 0
r+b r r+h r+2h u
c+b c c+h c+2h 0
s+b s s+h s+2h 0
r+2b r+b r r+h u
c+2b c+b c c+h 0
s+2b s+b s s+h 0
r+3b r+2b r+b r u
c+3b c+2b c+b c 0
s+3b s+2b s+b s 0
D1 D2 D3 D4 + I4 U
I0
R1
O1
S1
R2
O2
S2
R3
O3
S3
R4
O4
S4
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.
Production Production PlanningPlanningTableauTableauTru-RainbowTru-RainbowCompanyCompany
Example 14.3Example 14.3
AlternativesQuarter
1 2 3 4
TotalCapacity
UnusedCapacity
Requirements
Qu
arte
r
Subcontract
Overtime
Regular time
Subcontract
Overtime
Regular time
Subcontract
Overtime
Regular time
Subcontract
Overtime
Regular time
Beginning inventory
1
2
3
4
0 h 2h 3h 4h
r r+h r+2h r+3h u
c c+h c+2h c+3h 0
s s+h s+2h s+3h 0
r+b r r+h r+2h u
c+b c c+h c+2h 0
s+b s s+h s+2h 0
r+2b r+b r r+h u
c+2b c+b c c+h 0
s+2b s+b s s+h 0
r+3b r+2b r+b r u
c+3b c+2b c+b c 0
s+3b s+2b s+b s 0
D1 D2 D3 D4 + I4 U
I0
R1
O1
S1
R2
O2
S2
R3
O3
S3
R4
O4
S4
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.
Production Production PlanningPlanningTableauTableauTru-RainbowTru-RainbowCompanyCompany
AlternativesQuarter
1 2 3 4
TotalCapacity
UnusedCapacity
Requirements
Qu
arte
r
Subcontract
Overtime
Regular time
Subcontract
Overtime
Regular time
Subcontract
Overtime
Regular time
Subcontract
Overtime
Regular time
Beginning inventory
1
2
3
4
0 h 2h 3h 4h
r r+h r+2h r+3h u
c c+h c+2h c+3h 0
s s+h s+2h s+3h 0
r+b r r+h r+2h u
c+b c c+h c+2h 0
s+b s s+h s+2h 0
r+2b r+b r r+h u
c+2b c+b c c+h 0
s+2b s+b s s+h 0
r+3b r+2b r+b r u
c+3b c+2b c+b c 0
s+3b s+2b s+b s 0
D1 D2 D3 D4 + I4 U
I0
R1
O1
S1
R2
O2
S2
R3
O3
S3
R4
O4
S4
Quarter
1 2 3 4 Total
Demand 300 850 1500 350 3000Capacities Regular time 450 450 750 450 2100 Overtime 90 90 150 90 420 Subcontracting 200 200 200 200 800
Current inventory = 250,000Ending inventory = 300,000Regular time = $1.00/unitOvertime = $1.50/unitSubcontracting = $1.90/unitInventory holding cost = $0.30/gallon/quarterMaximum overtime = 20% of regular timeMaximum subcontract = 200,000No back orders or stockouts
Example 14.3Example 14.3
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.
Production Production PlanPlanTru-RainbowTru-RainbowCompanyCompany
1500 1500 —
1250 1250 —
1000 1000 —
750 750 —
500 500 —
250 250 —
0 0 —| | | |11 22 33 44
QuarterQuarter
Pai
nt
(th
ou
san
ds
of
gal
lon
s)P
ain
t (t
ho
usa
nd
s o
f g
allo
ns)
RequirementsRequirements
Figure 14.8Figure 14.8
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.
Production Production PlanPlanTru-RainbowTru-RainbowCompanyCompany
1500 1500 —
1250 1250 —
1000 1000 —
750 750 —
500 500 —
250 250 —
0 0 —| | | |11 22 33 44
QuarterQuarter
Pai
nt
(th
ou
san
ds
of
gal
lon
s)P
ain
t (t
ho
usa
nd
s o
f g
allo
ns)
Production planProduction plan
RequirementsRequirements
Figure 14.8Figure 14.8
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.
Production Production PlanPlanTru-RainbowTru-RainbowCompanyCompany
1500 1500 —
1250 1250 —
1000 1000 —
750 750 —
500 500 —
250 250 —
0 0 —| | | |11 22 33 44
QuarterQuarter
Pai
nt
(th
ou
san
ds
of
gal
lon
s)P
ain
t (t
ho
usa
nd
s o
f g
allo
ns)
510510
300300
Production planProduction plan
RequirementsRequirements
InventoryInventoryaccumulationaccumulation
Figure 14.8Figure 14.8
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.
Production Production PlanPlanTru-RainbowTru-RainbowCompanyCompany
110110
400400
1500 1500 —
1250 1250 —
1000 1000 —
750 750 —
500 500 —
250 250 —
0 0 —| | | |11 22 33 44
QuarterQuarter
Pai
nt
(th
ou
san
ds
of
gal
lon
s)P
ain
t (t
ho
usa
nd
s o
f g
allo
ns)
510510
300300
InventoryInventoryconsumptionconsumption
Production planProduction plan
RequirementsRequirements
InventoryInventoryaccumulationaccumulation
Figure 14.8Figure 14.8
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.
Production Production PlanPlanTru-RainbowTru-RainbowCompanyCompany
110110
400400
1500 1500 —
1250 1250 —
1000 1000 —
750 750 —
500 500 —
250 250 —
0 0 —| | | |11 22 33 44
QuarterQuarter
Pai
nt
(th
ou
san
ds
of
gal
lon
s)P
ain
t (t
ho
usa
nd
s o
f g
allo
ns)
510510
300300
InventoryInventoryconsumptionconsumption
Production planProduction plan
RequirementsRequirements
InventoryInventoryaccumulationaccumulation
Figure 14.8Figure 14.8
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.
Production Production PlanningPlanningTableauTableauTru-RainbowTru-RainbowCompanyCompany
Figure 14.9Figure 14.9
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.
Example 14.3Example 14.3
Production Production PlanningPlanningTableauTableauTru-RainbowTru-RainbowCompanyCompany
Total Cost
Quarter Cost
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.
Example 14.3Example 14.3
Production Production PlanningPlanningTableauTableauTru-RainbowTru-RainbowCompanyCompany
Total Cost
Quarter Cost
1 250($0) + 30($1.00) + 20($1.90) = $68
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.
Example 14.3Example 14.3
Production Production PlanningPlanningTableauTableauTru-RainbowTru-RainbowCompanyCompany
Total Cost
Quarter Cost
1 250($0) + 30($1.00) + 20($1.90) = $682 420($1.30) + 90($1.80) + 340($1.00) = 1,048
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.
Example 14.3Example 14.3
Production Production PlanningPlanningTableauTableauTru-RainbowTru-RainbowCompanyCompany
Total Cost
Quarter Cost
1 250($0) + 30($1.00) + 20($1.90) = $682 420($1.30) + 90($1.80) + 340($1.00) = 1,0483 110($1.30) + 90($1.80) + 200($2.20)
+ 750($1.00) + 150($1.50) = 2,100
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.
Example 14.3Example 14.3
Production Production PlanningPlanningTableauTableauTru-RainbowTru-RainbowCompanyCompany
Total Cost
Quarter Cost
1 250($0) + 30($1.00) + 20($1.90) = $682 420($1.30) + 90($1.80) + 340($1.00) = 1,0483 110($1.30) + 90($1.80) + 200($2.20)
+ 750($1.00) + 150($1.50) = 2,1004 450($1.00) + 90($1.50) + 110($1.90) = 794
Total $4,010
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.
Example 14.3Example 14.3
Regular-Time Overtime Subcon-Quarter Production Production tracting Total
Anticipation Inventory
Quarter Quantity
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.
Example 14.3Example 14.3
1 450 90 20 5602 450 90 200 7403 750 150 200 1,1004 450 90 110 650
Totals 2,100 420 530 3,050
Regular-Time Overtime Subcon-Quarter Production Production tracting Total
Anticipation Inventory
Quarter Quantity
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.
Example 14.3Example 14.3
1 450 90 20 5602 450 90 200 7403 750 150 200 1,1004 450 90 110 650
Totals 2,100 420 530 3,050
Regular-Time Overtime Subcon-Quarter Production Production tracting Total
Anticipation Inventory
Quarter Quantity
1 250 + 560 – 300 = 5102 510 + 740 – 850 = 4003 400 + 1,100 – 1,500 = 04 0 + 650 – 350 = 300
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.
Solved Problem 1Solved Problem 1
Figure 14.10Figure 14.10
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.
Solved Problem 1Solved Problem 1
Figure 14.11Figure 14.11
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.
Solved Problem 1Solved Problem 1
Figure 14.12Figure 14.12
To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.
Solved Solved Problem 2Problem 2
Figure 14.13Figure 14.13