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    Aggregate Planning: Quarter Demand Forecast

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    herrajohn
    Paris Paint Company needs to plan labor and production levels for the next four quarters. The marketing department has forecasted demand as 380, 630, 220, and 160 thousand gallons for each quarter respectively. Currently there are 280 employees, hiring costs $1,200 per employee, and firing costs $2,500 per employee. Inventory costs $1 per gallon held each quarter. Employees produce 1,000 gallons per quarter and Paris wants to end the year with at least 20,000 gallons of inventory. The plant can employ up to 370 workers and overtime is limited.

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    Aggregate Planning: Quarter Demand Forecast

    Uploaded by

    herrajohn
    66 views1 page
    Paris Paint Company needs to plan labor and production levels for the next four quarters. The marketing department has forecasted demand as 380, 630, 220, and 160 thousand gallons for each quarter respectively. Currently there are 280 employees, hiring costs $1,200 per employee, and firing costs $2,500 per employee. Inventory costs $1 per gallon held each quarter. Employees produce 1,000 gallons per quarter and Paris wants to end the year with at least 20,000 gallons of inventory. The plant can employ up to 370 workers and overtime is limited.

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    Case Study

    Original Title

    Paris Paint

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    Paris Paint Company needs to plan labor and production levels for the next four quarters. The marketing department has forecasted demand as 380, 630, 220, and 160 thousand gallons for each quarter respectively. Currently there are 280 employees, hiring costs $1,200 per employee, and firing costs $2,500 per employee. Inventory costs $1 per gallon held each quarter. Employees produce 1,000 gallons per quarter and Paris wants to end the year with at least 20,000 gallons of inventory. The plant can employ up to 370 workers and overtime is limited.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    66 views1 page

    Aggregate Planning: Quarter Demand Forecast

    Uploaded by

    herrajohn
    Paris Paint Company needs to plan labor and production levels for the next four quarters. The marketing department has forecasted demand as 380, 630, 220, and 160 thousand gallons for each quarter respectively. Currently there are 280 employees, hiring costs $1,200 per employee, and firing costs $2,500 per employee. Inventory costs $1 per gallon held each quarter. Employees produce 1,000 gallons per quarter and Paris wants to end the year with at least 20,000 gallons of inventory. The plant can employ up to 370 workers and overtime is limited.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 1

    Aggregate Planning

    The Paris Paint Company is in the process of planning labor force requirements and production
    levels for the next four quarters. The marketing department has provided production with the
    following forecasts of demand for Paris Paint over the next year:

    Quarter 1 2 3 4
    Demand forecast
    (in thousands of gallons) 380 630 220 160

    There are currently 280 employees with the company. Employees are hired for at least one full
    quarter. Hiring costs are $1,200 per employee and firing costs are $2,500 per employee. Inventory
    costs are $1 per gallon per quarter. It is estimated that one worker produces 1,000 gallons of paint
    each quarter.

    Paris currently has 80,000 gallons of paint in inventory and would like to end the year with an
    inventory of at least 20,000 gallons.

    a. Determine the minimum constant workforce plan for Paris Paint and the cost of the plan.
    Assume that stock-outs are not allowed.
    b. Determine the zero inventory plan and the cost of that plan.
    c. If Paris Paint were able to backorder excess demand at a cost of $2 per gallon per quarter,
    determine a minimum constant workforce plan that holds less inventory than the plan you
    found in part (a), but incurs stock-outs in quarter 2. Determine the cost of that plan
    d. Formulate this problem as a linear program.

    Due to safety regulations, the plant has capacity to employ a maximum of 370 workers. Regular-
    time employee costs are $12.50 per hour. Employees work 7-hours a day, 5-days a week and 4-
    weeks a month. Overtime is paid on a time-and-a-half basis. Subcontracting is available at a cost
    of $7 per gallon of paint produced. Overtime is limited to 3 hours per employee per day, and no
    more than 100,000 gallons can be subcontracted in any quarter.

    e. Determine a policy that meets the demand and the cost of that policy. (Assume stock-outs are
    not allowed.)
    f. Formulate this problem as a linear program.

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