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Session – XIV
Chapter - 14
Ex. 5 Demand is for 12 months as 1000, 400, 400, 900, 400, 400500 500 1000 1500 2500 3000
Regular or Stable or uniform production is 1000 per month @ 100 per person & 10 workers are in force.
Hire & fire rate is 1000 & 500 resp. & Inventory cost is Rs 1 pr no per months. Find cost of aggregate plan by
1) Regular production & 2) Chase to have 0 Inv. at close by demand method to have 0 Inv. & compare results.
Sol.Demand Regular P Inventory
1000 1000 0
400 1000 600
400 1000 1200
400 1000 1800
400 1000 2400
400 1000 3000
500 1000 3500
500 1000 4000
1000 1000 4000
1500 1000 3500
2500 1000 2000
3000 1000 0
TOTAL 26,000
Cost is 26,000 x 1 = 26,000 for inventory holding & No. other cost
2) Chase demand method
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Demand Prod. Hire Fire
1000 1000 0 0400 400 0 6400 400 0 0400 400 0 0400 400 0 0400 400 0 0500 500 1 0500 500 0 0
1000 1000 5 01500 1500 5 02500 2500 10 03000 3500 5 0
Total 26 6
26 x 1000 + 6 x 500 = 29000
Result By 1st is 26,0002nd is 29,000
1st is more economical
Ex-6 Demand for 4 months is
Month Demand Regular Max OT Limit
Max Sub Con Limit
1 900 1000 100 500
2 1500 1200 150 500
3 1600 1300 200 500
4 3000 1300 200 500
O.T. rate is 25Sub contract is 28 (Higher) Open Inventory is 300 Ns. & closing O. Inventory cost is 3
Sol. Total demand is 7000Regular Proud is 4800
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Inventory is + 300Shortfall is 1900
Shortfall can be met by O.T. & Subcontracting O.T. limit is 650 @ 25/- use full Sub Const. is 1250 @ 28
Month Demand Production
O.T. limit S.C. limit Inv.
1 900 1000 100 0 5002 1500 1200 150 250 6003 1600 1300 200 500 10004 3000 1300 200 500 0
650 1250 2100
Cost is 650 x 25 + 1250 x 28 + 2100 x 3
= 16,250 + 35,000
= 57,550
Second Method as per demand
Month Demand Production
O.T. limit
S.C. limit Inv.
1 900 1000 0 0 300+100=4002 1500 1200 0 0 1003 1600 1300 200 0 04 3000 1300 450 1250 0
650 1250 500
650 x 25 + 1250 x 28 + 500 x 3
= 16250 + 35000 + 1500
= 52750
Saving is 4800Ex.7
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Month Demand Production
O.T. limit S.C. limit Inv.
1 100 100 50 0 502 130 100 50 30 1003 200 100 50 50 1004 300 100 50 50 0
730 400 200 130 250
Total O.T. limit is 200 & cost is 25Total S.C. limit is 200 & cost is 35
Open & close inventory is 0 & cost is 5.
Sol.
Cost 200 x 25 + 130 x 35 + 250 x 5= 5000 + 4550 + 1250= 10,800
Second method as per demand
Month Demand Production
O.T. limit S.C. limit Inv.
1 100 100 0 0 02 130 100 30 0 03 200 100 70 30 04 300 100 100 100 0
730 400 200 130
200 x 25 + 130 x 35
= 9550
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