| Surestep aggregate planning model | |||||
| Input Data | |||||
| Initial Inventoryof shoes | 500 | ||||
| Initial Number of Workers | 100 | ||||
| Regular Hours/Worker/Month | 160 | ||||
| Maximum Overtime Hours/Worker/Month | 20 | ||||
| Hiring Cost/Worker | 1600 | ||||
| Firing Cost/Worker | 2000 | ||||
| Regualr Wages/Worker/Month | 1500 | ||||
| Overtime Wage Rate/ Hour | 13 | ||||
| Labor Hours/Pair of Shoes | 4 | ||||
| Raw Material Cost/Pair of Shoes | 15 | ||||
| Holding Cost/Pair of Shoes in Inventory/Month | 3 | ||||
| Worker Plan | Month 1 | Month 2 | Month 3 | Month 4 | |
| Workers from previous month | 100 | 94 | 93 | 38 | |
| Workers hired | 0 | 0 | 0 | 0 | |
| Workers fired | 6 | 1 | 55 | 0 | |
| Workers available after hiring and firing | 94 | 93 | 38 | 38 | |
| Regular-time hours available | 15040 | 14880 | 6080 | 6080 | |
| Overtime labor hours used | 0 | 80 | 0 | 0 | |
| Maximum overtime labor hours available | 1880 | 1860 | 760 | 760 | |
| Total Hours for production | 15040 | 14960 | 6080 | 6080 | |
| Production Plan | Month 1 | Month 2 | Month 3 | Month 4 | |
| Shoes Produced | 3760 | 3740 | 1520 | 1500 | |
| Production Capacity | 3760 | 3740 | 1520 | 1520 | |
| Inventory after production | 4260 | 5000 | 1500 | 1000 | |
| Demand | 3000 | 5000 | 2000 | 1000 | |
| Excess | 1260 | 0 | 0 | 0 | |
| Shortage | 0 | 20 | 500 | 0 | |
| Net(excess minus shortage) | 1260 | -20 | -500 | 0 | |
| Ending Inventory | 1260 | -20 | -500 | 0 | |
| Summary of Cost | Month 1 | Month 2 | Month 3 | Month 4 | Totals |
| Hiring Cost | $ - | $ - | $ - | $ - | $ - |
| Firing Cost | $ 12,000 | $ 2,000 | $ 110,000 | $ - | $ 124,000 |
| Regular-time wages | $ 141,000 | $ 139,500 | $ 57,000 | $ 57,000 | $ 394,500 |
| Overtime Wages | $ - | $ - | $ - | $ - | |
| Raw Material Cost | $ 56,400 | $ 55,800 | $ 22,800 | $ 22,500 | $ 157,500 |
| Holding Cost | $ 3,780 | $ - | $ - | $ - | $ 3,780 |
| Shortage Cost | $ - | $ 400 | $ 10,000 | $ - | $ 10,400 |
| Totals | $ 213,180 | $ 197,700 | $ 199,800 | $ 79,500 | $ 690,180 |
| Sensitivity of shortages in the first three months and total cost to unit shortage cost | |||||
| Unit Shortage Cost | Shortage 1 | Shortage 2 | Shortage 3 | TotalCost | |
| $B$40 | $C$40 | $D$40 | $F$53 | ||
| 0 | 0 | 2280 | 1640 | 621,740 | |
| 5 | 0 | 2220 | 1580 | 640,920 | |
| 10 | 0 | 2220 | 1580 | 659,920 | |
| 15 | 0 | 2220 | 1580 | 678,920 | |
| 20 | 0 | 20 | 500 | 690,180 | |
| 25 | 0 | 20 | 20 | 692,780 | |
| 30 | 0 | 0 | 0 | 692,820 | |
| 35 | 0 | 0 | 0 | 692,820 | |