Aggregate Planning and Cost Minimization for Furniture Production: A Case Study of Wormwood, Ltd
Analysis of cost-effective production planning in the furniture industry.
David Rodriguez
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Aggregate Planning and Cost Minimization for Furniture Production: A Case Study of Wormwood, Ltd
Problem 11-9
Wormwood, Ltd., produces a variety of furniture products. The planning committee wants to prepare an
aggregate plan for the next six months using the following information:
MONTH
1 2 3 4 5 6
Demand 160 150 160 180 170 140
Capacity
Regular 150 150 150 150 160 160
Overtime 10 10 0 10 10 10
Cost Per Unit
Regular time $50
Overtime 75
Subcontract 80
Inventory, per period 4
Subcontracting can handle a maximum of 10 units per month. Beginning inventory is zero. Develop a plan
that minimizes total cost. No back orders are allowed. (Negative amounts should be indicated by a
minus sign. Leave no cells blank - be certain to enter "0" wherever required. Omit the "$" sign in
your response.)
Period
Forecast
Output
Regular
1
160
150
2
150
150
3
160
150
4
180
150
5
170
160
6
140
160
Total
960
920
Overtime
Subcontract 0
10
0
10
10
0
10
10
0
10
0
10
20
50
Output- Forecast 0 10 0 -10 0 30 30
Inventory
Beginning 0 0 10 10 0 0
Ending 0 10 10 0 0 30
Average 0 5 10 5 0 15 35
Backlog 0 0 0 0 0 0 0
Costs:
Regular $ 7,500 7,500 7,500 7,500 8,000 8,000 $ 46,000
Overtime 750 750 0 750 750 750 3,750
Subcontract 0 0 800 800 0 0 1,600
Inventory 0 20 40 20 0 60 140
Backlog 0 0 0 0 0 0 0
Total $ 8,250 8,270 8,340 9,070 8,750 8,810 $ 51,490
10 out of
10.00
points
Aggregate Planning and Cost Minimization for Furniture Production: A Case Study of Wormwood, Ltd
Problem 11-9
Wormwood, Ltd., produces a variety of furniture products. The planning committee wants to prepare an
aggregate plan for the next six months using the following information:
MONTH
1 2 3 4 5 6
Demand 160 150 160 180 170 140
Capacity
Regular 150 150 150 150 160 160
Overtime 10 10 0 10 10 10
Cost Per Unit
Regular time $50
Overtime 75
Subcontract 80
Inventory, per period 4
Subcontracting can handle a maximum of 10 units per month. Beginning inventory is zero. Develop a plan
that minimizes total cost. No back orders are allowed. (Negative amounts should be indicated by a
minus sign. Leave no cells blank - be certain to enter "0" wherever required. Omit the "$" sign in
your response.)
Period
Forecast
Output
Regular
1
160
150
2
150
150
3
160
150
4
180
150
5
170
160
6
140
160
Total
960
920
Overtime
Subcontract 0
10
0
10
10
0
10
10
0
10
0
10
20
50
Output- Forecast 0 10 0 -10 0 30 30
Inventory
Beginning 0 0 10 10 0 0
Ending 0 10 10 0 0 30
Average 0 5 10 5 0 15 35
Backlog 0 0 0 0 0 0 0
Costs:
Regular $ 7,500 7,500 7,500 7,500 8,000 8,000 $ 46,000
Overtime 750 750 0 750 750 750 3,750
Subcontract 0 0 800 800 0 0 1,600
Inventory 0 20 40 20 0 60 140
Backlog 0 0 0 0 0 0 0
Total $ 8,250 8,270 8,340 9,070 8,750 8,810 $ 51,490
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Subject
Operations Management