Supply Chain Management

Data

Input Data
Demand Forecast	Costs
Month	Demand Forecast	Demand When promote in April	Demand When promote in July	Item	Cost
January	10,000	10,000	10,000	Materials cost/unit	$ 40
February	11,000	11,000	11,000	Inventory holding cost/unit/month	$ 3
March	15,000	15,000	15,000	Marginal cost of stockout/unit/month
April	18,000	26700	18,000	Hiring and training cost/worker
May	25,000	22500	25,000	Layoff cost/worker
June	26,000	23400	26,000	Labor hours required/unit	2
July	30,000	30,000	41,000	Regular time cost/hour	$ 15
August	29,000	29,000	26,100	Over time cost/hour	$ 22
September	21,000	21,000	18,900	Marginal subcontracting cost/unit
October	18,000	18,000	18,000
November	14,000	14,000	14,000	Max. overtime per employee per month	20
December	11,000	11,000	11,000	Starting work force size	250
Base sale price	$ 125	250 Rabadi: Rabadi: new price for part c
Starting Inventory	5000
Ending Inventory	5000

a.No Promotion (Baseline)

Aggregate Plan Decision Variables	Constraints
Ht	Lt	Wt	Ot	It	St	Ct	Pt
Period	# Hired	# Laid off	# Workforce	Overtime	Inventory	Stockout	Subcontract	Production	Demand	Price	Workforce schopra: Workforce balance	Capacity schopra: Production cannot exceed regular and over time capacity	Inventory schopra: Inventory balance (Has redundant variables)	Over time schopra: Overtime production per period
0	0	0	250	0	5,000	0	0
1	0	0	250	0	15,000	0	0	20,000	10,000	$ 125	0	0	0	5000
2	0	0	250	0	24,000	0	0	20,000	11,000	$ 125	0	0	0	5000
3	0	0	250	0	29,000	0	0	20,000	15,000	$ 125	0	0	0	5000
4	0	0	250	0	31,000	0	0	20,000	18,000	$ 125	0	0	0	5000
5	0	0	250	0	26,000	0	0	20,000	25,000	$ 125	0	0	0	5000
6	0	0	250	0	20,000	0	0	20,000	26,000	$ 125	0	0	0	5000
7	0	0	250	0	10,000	0	0	20,000	30,000	$ 125	0	0	0	5000
8	0	0	250	0	1,000	0	0	20,000	29,000	$ 125	0	0	0	5000
9	0	0	250	0	0	0	0	20,000	21,000	$ 125	0	0	0	5000
10	0	0	250	0	0	0	0	18,000	18,000	$ 125	0	4000	0	5000
11	0	0	250	0	0	0	0	14,000	14,000	$ 125	0	12000	0	5000
12	0	0	250	0	5,000	0	0	16,000	11,000	$ 125	0	8000	0	5000
0	21429	0	0
Aggregate Plan Costs
Period	Hiring	Lay off	Regular time	Overtime	Inventory	Stockout	Subcontract	Material
1	0	0	600,000	0	45,000	0	0	800,000
2	0	0	600,000	0	72,000	0	0	800,000
3	0	0	600,000	0	87,000	0	0	800,000
4	0	0	600,000	0	93,000	0	0	800,000
5	0	0	600,000	0	78,000	0	0	800,000
6	0	0	600,000	0	60,000	0	0	800,000
7	0	0	600,000	0	30,000	0	0	800,000
8	0	0	600,000	0	3,000	0	0	800,000
9	0	0	600,000	0	0	0	0	800,000
10	0	0	600,000	0	0	0	0	720,000
11	0	0	600,000	0	0	0	0	560,000
12	0	0	600,000	0	15,000	0	0	640,000
Total Cost =	$ 16,803,000
Total Revenue =	$ 28,500,000
Profit =	$ 11,697,000

Plan Chart

Aggregate Plan

Inventory 15000 24000 29000 31000 26000 20000 10000 1000 0 0 0 5000 Production 20000 20000 20000 20000 20000 20000 20000 20000 20000 18000 14000 16000 Demand 10000 11000 15000 18000 25000 26000 30000 29000 21000 18000 14000 11000 Stockout 0 0 0 0 0 0 0 0 0 0 0 0 Subcontracting 0 0 0 0 0 0 0 0 0 0 0 0

Period

b.Promotion in April@125

Aggregate Plan Decision Variables	Constraints
Ht	Lt	Wt	Ot	It	St	Ct	Pt
Period	# Hired	# Laid off	# Workforce	Overtime	Inventory	Stockout	Subcontract	Production	Demand	Price	Workforce schopra: Workforce balance	Capacity schopra: Production cannot exceed regular and over time capacity	Inventory schopra: Inventory balance (Has redundant variables)	Over time schopra: Overtime is limited per month
0	0	0	250	0	5,000	0	0
1	0	0	250	0	15,000	0	0	20,000	10,000	125.0	0	0	0	5000
2	0	0	250	0	24,000	0	0	20,000	11,000	125.0	0	0	0	5000
3	0	0	250	0	29,000	0	0	20,000	15,000	125.0	0	0	0	5000
4	0	0	250	0	22,300	0	0	20,000	26,700	123.8	0	0	0	5000
5	0	0	250	0	19,800	0	0	20,000	22,500	125.0	0	0	0	5000
6	0	0	250	0	16,400	0	0	20,000	23,400	125.0	0	0	0	5000
7	0	0	250	200	6,500	0	0	20,100	30,000	125.0	0	0	0	4800
8	0	0	250	5,000	0	0	0	22,500	29,000	125.0	0	0	0	0
9	0	0	250	2,000	0	0	0	21,000	21,000	125.0	0	0	0	3000
10	0	0	250	0	0	0	0	18,000	18,000	125.0	0	4000	0	5000
11	0	0	250	0	0	0	0	14,000	14,000	125.0	0	12000	0	5000
12	0	0	250	0	5,000	0	0	16,000	11,000	125.0	0	8000	0	5000
0	18786	0	0
Aggregate Plan Costs
Period	Hiring	Lay off	Regular time	Overtime	Inventory	Stockout	Subcontract	Material
1	0	0	600,000	0	45,000	0	0	800,000
2	0	0	600,000	0	72,000	0	0	800,000
3	0	0	600,000	0	87,000	0	0	800,000
4	0	0	600,000	0	66,900	0	0	800,000
5	0	0	600,000	0	59,400	0	0	800,000
6	0	0	600,000	0	49,200	0	0	800,000
7	0	0	600,000	4,400	19,500	0	0	804,000
8	0	0	600,000	110,000	0	0	0	900,000
9	0	0	600,000	44,000	0	0	0	840,000
10	0	0	600,000	0	0	0	0	720,000
11	0	0	600,000	0	0	0	0	560,000
12	0	0	600,000	0	15,000	0	0	640,000
Total Cost =	$ 17,036,400
Total Revenue =	$ 28,916,625
Profit =	$ 11,880,225
Profit increase	$ 183,225

b.Promotion in July@125

Aggregate Plan Decision Variables	Constraints
Ht	Lt	Wt	Ot	It	St	Ct	Pt
Period	# Hired	# Laid off	# Workforce	Overtime	Inventory	Stockout	Subcontract	Production	Demand	Price	Workforce schopra: Workforce balance	Capacity schopra: Production cannot exceed regular and over time capacity	Inventory schopra: Inventory balance (Has redundant variables)	Over time schopra: Overtime is limited per month
0	0	0	250	0	5,000	0	0
1	0	0	250	0	15,000	0	0	20,000	10,000	125.0	0	0	0	5000
2	0	0	250	0	24,000	0	0	20,000	11,000	125.0	0	0	0	5000
3	0	0	250	0	29,000	0	0	20,000	15,000	125.0	0	0	0	5000
4	0	0	250	0	31,000	0	0	20,000	18,000	125.0	0	0	0	5000
5	0	0	250	0	26,000	0	0	20,000	25,000	125.0	0	0	0	5000
6	0	0	250	4,200	22,100	0	0	22,100	26,000	125.0	0	0	0	800
7	0	0	250	5,000	3,600	0	0	22,500	41,000	123.8	0	0	0	0
8	0	0	250	5,000	0	0	0	22,500	26,100	125.0	0	0	0	0
9	0	0	250	0	0	0	0	18,900	18,900	125.0	0	2200	0	5000
10	0	0	250	0	0	0	0	18,000	18,000	125.0	0	4000	0	5000
11	0	0	250	0	0	0	0	14,000	14,000	125.0	0	12000	0	5000
12	0	0	250	0	5,000	0	0	16,000	11,000	125.0	0	8000	0	5000
600	21729	0	0
Aggregate Plan Costs
Period	Hiring	Lay off	Regular time	Overtime	Inventory	Stockout	Subcontract	Material
1	0	0	600,000	0	45,000	0	0	800,000
2	0	0	600,000	0	72,000	0	0	800,000
3	0	0	600,000	0	87,000	0	0	800,000
4	0	0	600,000	0	93,000	0	0	800,000
5	0	0	600,000	0	78,000	0	0	800,000
6	0	0	600,000	92,400	66,300	0	0	884,000
7	0	0	600,000	110,000	10,800	0	0	900,000
8	0	0	600,000	110,000	0	0	0	900,000
9	0	0	600,000	0	0	0	0	756,000
10	0	0	600,000	0	0	0	0	720,000
11	0	0	600,000	0	0	0	0	560,000
12	0	0	600,000	0	15,000	0	0	640,000
Total Cost =	$ 17,339,500
Total Revenue =	$ 29,198,750
Profit =	$ 11,859,250
Profit increase	$ 162,250

c.No Promotion (baseline@250)

Aggregate Plan Decision Variables	Constraints
Ht	Lt	Wt	Ot	It	St	Ct	Pt
Period	# Hired	# Laid off	# Workforce	Overtime	Inventory	Stockout	Subcontract	Production	Demand	Price	Workforce schopra: Workforce balance	Capacity schopra: Production cannot exceed regular and over time capacity	Inventory schopra: Inventory balance (Has redundant variables)	Over time schopra: Overtime is limited per month
0	0	0	250	0	5,000	0	0
1	0	0	250	0	15,000	0	0	20,000	10,000	$ 250	0	0	0	5000
2	0	0	250	0	24,000	0	0	20,000	11,000	$ 250	0	0	0	5000
3	0	0	250	0	29,000	0	0	20,000	15,000	$ 250	0	0	0	5000
4	0	0	250	0	31,000	0	0	20,000	18,000	$ 250	0	0	0	5000
5	0	0	250	0	26,000	0	0	20,000	25,000	$ 250	0	0	0	5000
6	0	0	250	0	20,000	0	0	20,000	26,000	$ 250	0	0	0	5000
7	0	0	250	0	10,000	0	0	20,000	30,000	$ 250	0	0	0	5000
8	0	0	250	0	1,000	0	0	20,000	29,000	$ 250	0	0	0	5000
9	0	0	250	0	0	0	0	20,000	21,000	$ 250	0	0	0	5000
10	0	0	250	0	0	0	0	18,000	18,000	$ 250	0	4000	0	5000
11	0	0	250	0	0	0	0	14,000	14,000	$ 250	0	12000	0	5000
12	0	0	250	0	5,000	0	0	16,000	11,000	$ 250	0	8000	0	5000
0	21429	0	0
Aggregate Plan Costs
Period	Hiring	Lay off	Regular time	Overtime	Inventory	Stockout	Subcontract	Material
1	0	0	600,000	0	45,000	0	0	800,000
2	0	0	600,000	0	72,000	0	0	800,000
3	0	0	600,000	0	87,000	0	0	800,000
4	0	0	600,000	0	93,000	0	0	800,000
5	0	0	600,000	0	78,000	0	0	800,000
6	0	0	600,000	0	60,000	0	0	800,000
7	0	0	600,000	0	30,000	0	0	800,000
8	0	0	600,000	0	3,000	0	0	800,000
9	0	0	600,000	0	0	0	0	800,000
10	0	0	600,000	0	0	0	0	720,000
11	0	0	600,000	0	0	0	0	560,000
12	0	0	600,000	0	15,000	0	0	640,000
Total Cost =	$ 16,803,000
Total Revenue =	$ 57,000,000
Profit =	$ 40,197,000

C.Promotion in April@250

Aggregate Plan Decision Variables	Constraints
Ht	Lt	Wt	Ot	It	St	Ct	Pt
Period	# Hired	# Laid off	# Workforce	Overtime	Inventory	Stockout	Subcontract	Production	Demand	Price	Workforce schopra: Workforce balance	Capacity schopra: Production cannot exceed regular and over time capacity	Inventory schopra: Inventory balance (Has redundant variables)	Over time schopra: Overtime is limited per month
0	0	0	250	0	5,000	0	0
1	0	0	250	0	15,000	0	0	20,000	10,000	250.0	0	0	0	5000
2	0	0	250	0	24,000	0	0	20,000	11,000	250.0	0	0	0	5000
3	0	0	250	0	29,000	0	0	20,000	15,000	250.0	0	0	0	5000
4	0	0	250	0	22,300	0	0	20,000	26,700	247.5	0	0	0	5000
5	0	0	250	0	19,800	0	0	20,000	22,500	250.0	0	0	0	5000
6	0	0	250	0	16,400	0	0	20,000	23,400	250.0	0	0	0	5000
7	0	0	250	200	6,500	0	0	20,100	30,000	250.0	0	0	0	4800
8	0	0	250	5,000	0	0	0	22,500	29,000	250.0	0	0	0	0
9	0	0	250	2,000	0	0	0	21,000	21,000	250.0	0	0	0	3000
10	0	0	250	0	0	0	0	18,000	18,000	250.0	0	4000	0	5000
11	0	0	250	0	0	0	0	14,000	14,000	250.0	0	12000	0	5000
12	0	0	250	0	5,000	0	0	16,000	11,000	250.0	0	8000	0	5000
0	18786	0	0
Aggregate Plan Costs
Period	Hiring	Lay off	Regular time	Overtime	Inventory	Stockout	Subcontract	Material
1	0	0	600,000	0	45,000	0	0	800,000
2	0	0	600,000	0	72,000	0	0	800,000
3	0	0	600,000	0	87,000	0	0	800,000
4	0	0	600,000	0	66,900	0	0	800,000
5	0	0	600,000	0	59,400	0	0	800,000
6	0	0	600,000	0	49,200	0	0	800,000
7	0	0	600,000	4,400	19,500	0	0	804,000
8	0	0	600,000	110,000	0	0	0	900,000
9	0	0	600,000	44,000	0	0	0	840,000
10	0	0	600,000	0	0	0	0	720,000
11	0	0	600,000	0	0	0	0	560,000
12	0	0	600,000	0	15,000	0	0	640,000
Total Cost =	$ 17,036,400
Total Revenue =	$ 57,833,250
Profit =	$ 40,796,850
Profit increase	$ 599,850

C.Promotion in July@250

Aggregate Plan Decision Variables	Constraints
Ht	Lt	Wt	Ot	It	St	Ct	Pt
Period	# Hired	# Laid off	# Workforce	Overtime	Inventory	Stockout	Subcontract	Production	Demand	Price	Workforce schopra: Workforce balance	Capacity schopra: Production cannot exceed regular and over time capacity	Inventory schopra: Inventory balance (Has redundant variables)	Over time schopra: Overtime is limited per month
0	0	0	250	0	5,000	0	0
1	0	0	250	0	15,000	0	0	20,000	10,000	250.0	0	0	0	5000
2	0	0	250	0	24,000	0	0	20,000	11,000	250.0	0	0	0	5000
3	0	0	250	0	29,000	0	0	20,000	15,000	250.0	0	0	0	5000
4	0	0	250	0	31,000	0	0	20,000	18,000	250.0	0	0	0	5000
5	0	0	250	0	26,000	0	0	20,000	25,000	250.0	0	0	0	5000
6	0	0	250	4,200	22,100	0	0	22,100	26,000	250.0	0	0	0	800
7	0	0	250	5,000	3,600	0	0	22,500	41,000	247.5	0	0	0	0
8	0	0	250	5,000	0	0	0	22,500	26,100	250.0	0	0	0	0
9	0	0	250	0	0	0	0	18,900	18,900	250.0	0	2200	0	5000
10	0	0	250	0	0	0	0	18,000	18,000	250.0	0	4000	0	5000
11	0	0	250	0	0	0	0	14,000	14,000	250.0	0	12000	0	5000
12	0	0	250	0	5,000	0	0	16,000	11,000	250.0	0	8000	0	5000
600	21729	0	0
Aggregate Plan Costs
Period	Hiring	Lay off	Regular time	Overtime	Inventory	Stockout	Subcontract	Material
1	0	0	600,000	0	45,000	0	0	800,000
2	0	0	600,000	0	72,000	0	0	800,000
3	0	0	600,000	0	87,000	0	0	800,000
4	0	0	600,000	0	93,000	0	0	800,000
5	0	0	600,000	0	78,000	0	0	800,000
6	0	0	600,000	92,400	66,300	0	0	884,000
7	0	0	600,000	110,000	10,800	0	0	900,000
8	0	0	600,000	110,000	0	0	0	900,000
9	0	0	600,000	0	0	0	0	756,000
10	0	0	600,000	0	0	0	0	720,000
11	0	0	600,000	0	0	0	0	560,000
12	0	0	600,000	0	15,000	0	0	640,000
Total Cost =	$ 17,339,500
Total Revenue =	$ 58,397,500
Profit =	$ 41,058,000
Profit increase	$ 861,000

Summary

Price=$125
No promotion	Promotion (April)	Promotion (July)
Total Cost =	$16,803,000	$17,036,400	$17,339,500
Total Revenue =	$28,500,000	$28,916,625	$29,198,750
Profit =	$11,697,000	$11,880,225	$11,859,250
Profit increase =	$183,225	$162,250
Price= $250
No promotion	Promotion (April)	Promotion (July)
Total Cost =	$16,803,000	$17,036,400	$17,339,500
Total Revenue =	$57,000,000	$57,833,250	$58,397,500
Profit =	$40,197,000	$40,796,850	$41,058,000
Profit increase =	$599,850	$861,000