Business Finance - Operations Management Week One Assignment

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Week1-CapacityPlanningSheet.xlsx
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Capacity Planning

Capacity Planning Example
Expected Monetary Value (EMV) and Minimax Regret Criteria
Payoff Table (Profits) State
('000) Market Upturn Stable Market Market Downturn
Probabilities 50% 30% 20% EMV
Build New Store $19 $4 ($4) $9.90 Best
Decision Expand Old Store $15 $5 ($3) $8.40
Do Nothing $5 $1 ($1) $2.60
Regret Table State
Market Upturn Stable Market Market Downturn Max Regret
Build New Store $0 $1 $3 $3 Best
Decision Expand Old Store $4 $0 $2 $4
Do Nothing $14 $4 $0 $14

Material Requirements Planning

Material Requirements Planning Example
Product Structure Tree
A
C B (2)
C
Lot-for-lot Model
Week Number 1 2 3 4 5 6
Item A: LT = 1 week
Gross Requirements 0 15 15 18 8 12
Scheduled Receipts
Projected on Hand 16 16 1 0 0 0
Net Requirements 0 0 14 18 8 12
Planned-Order Receipts 0 0 14 18 8 12
Planned-Order Releases 0 14 18 8 12 0
Item B: LT = 2 weeks
Gross Requirements 0 28 36 16 24 0
Scheduled Receipts 40
Projected on Hand 12 52 24 0 0 0
Net Requirements 0 0 12 16 24 0
Planned-Order Receipts 0 0 12 16 24 0
Planned-Order Releases 12 16 24 0 0 0
Item C: LT = 1 week
Gross Requirements 12 30 42 8 12 0
Scheduled Receipts
Projected on Hand 50 38 8 0 0 0
Net Requirements 0 0 34 8 12 0
Planned-Order Receipts 0 0 34 8 12 0
Planned-Order Releases 0 34 8 12 0 0

Scheduling

Scheduling Example
Shortest Processing Time (SPT) Sequencing Rule
(all times in hours)
Job Processing Time Time Due Flow Time Lateness
Econoline 3 18 3 0
LTD 6 12 9 0
Ranger 8 10 17 7
Thunderbird 12 22 29 7
Bronco 15 20 44 24
Totals 44 102 38
Average Flow Time 20.4
Average Job Lateness 7.6
Average Number of Jobs in the System 2.32

Aggregate Planning

Capacity Planning
Data
Beginning Inventory 50
Beginning Workers 20
St. Time Hrs. per worker per month 160
Max. OT Hours per worker per month 40
Hiring Cost per worker $4,000
Layoff Cost per worker $5,000
St. Time Pay per worker per hour $18
OT Pay per worker per hour $25
Labor Hours per unit produced 10
Raw Materials Cost per unit $10
Holding cost per unit per month $2
Shortage Cost per unit per month $5
Subcontracting Cost per unit $120
Staffing Plan
Month 1 2 3 4 5 6
Workers from Previous Month 20 20 20 20 20 20
Workers Hired 0 0 0 0 0 0
Workers Laid Off 0 0 0 0 0 0
Workers after Hire and Layoff 20 20 20 20 20 20
>= >= >= >= >= >=
Minimum Workers 0 0 0 0 0 0
St. Time Hours Used
<= <= <= <= <= <=
St. Time Hours Available 800 800 800 800 800 800
Overtime Hours Used 0 0 0 0 0 0
<= <= <= <= <= <=
Max OT Labor Hrs Available 400 400 400 400 400 400
Total Production Hours Used 0 0 0 0 0 0
Production Plan
Month 1 2 3 4 5 6 Totals
Units Produced on St. Time 50 50 50 50 50 50 300
Units Produced on OT 0 0 0 0 0 0 0
Total Units Produced 50 50 50 50 50 50 300
Units Subcontracted 0 0 0 0 0
Demand 50 60 30 65 50 45 300
Held in Inventory 0 0 0 0 0 0
Shortage 0 0 0 0 0 0
Net Left 0 0 0 0 0 0
= = = = = =
Ending Inventory 50 40 60 45 45 50
>=
Meet End Inv. Requirement 50
Cost Summary
Month 1 2 3 4 5 6 Totals
Hiring Cost $0 $0 $0 $0 $0 $0 $0
Layoff Cost $0 $0 $0 $0 $0 $0 $0
St. Time Labor Cost $14,400 $14,400 $14,400 $14,400 $14,400 $14,400 $86,400
OT Labor Cost $0 $0 $0 $0 $0 $0 $0
Raw Material Cost $500 $500 $500 $500 $500 $500 $3,000
Holding Cost $0 $0 $0 $0 $0 $0 $0
Shortage Cost $0 $0 $0 $0 $0 $0 $0
Subcontracting Cost $0 $0 $0 $0 $0 $0 $0
Totals by Month $14,900 $14,900 $14,900 $14,900 $14,900 $14,900 $89,400
Grand Total Cost $89,400