Description
Transportation model is used to schedule shipments from sources to destinations so that total transportation costs are minimized. The ppt talks about its use in Aggregate Planning.
Aggregate Planning with the Transportation method
Outline of the Presentation
• • • • • • Definition of Aggregate Planning Objectives Aggregate Planning Strategies Transportation Model Transportation Method of Production Tru-Rainbow Company Problem
What is Aggregate Planning?
• Provides the quantity and timing of production for intermediate future
– Usually 3 to 18 months into future
• Combines (‘aggregates’) production
– Often expressed in common units
• Example: Hours, dollars, equivalents (e.g., FTE students)
• Involves capacity and demand variables
Objectives of Aggregate Planning
• • • • Meet demand Use capacity efficiently Meet inventory policy Minimize cost
– – – – Labor Inventory Plant & equipment Subcontract
Aggregate Planning Strategies
• Chase Strategy • Level Strategy
– Level Utilization strategy – Level Inventory strategy
• Mathematical Techniques
– Transportation method
Transportation Model
Objective : • Schedule shipments from sources to destinations so that total transportation costs are minimized • Decide where to locate a new facility
From \ To Factory A Factory B Factory C Demand Warehouse A Warehouse B $4 $1 $2 200 $6 $5 $8 400 Warehouse C $2 $3 $4 300 Supply 100 300 500 900
Transportation Method of Production
• Helpful in determining anticipation inventories • More useful in manufacturers production plan than service providers staffing plan • Assumptions
– Demand forecast available for each period
– Work level plan for regular time
– Capacity limits on overtime and subcontracting
Transportation Method
Tru – Rainbow Company Problem
Tru- Rainbow’s Manufacturing manager wants to determine the best production plan using the above table
• • • • • • Current Inventory – 250,000 gallons Ending Inventory – 300,000 gallons Regular time cost -$1 /unit Overtime Cost - $1.50 /unit Subcontracting Cost - $ 1.90/unit Inventory holding cost - $.30 /gallon/quarter
Tru- Rainbow Company contd..
QUARTER 1 DEMAND Capacities Regular time Overtime Subcontracting 450 90 200 450 90 200 750 150 200 450 90 200 2100 420 800 300 2 850 3 1500 4 350 TOTAL 3000
Tru- Rainbow’s Manufacturing manager wants to determine the best production plan using the above table .
The Constraints
• Maximum allowable overtime/ quarter = 20% of regular time capacity in that quarter • Subcontractor can supply a maximum of 200,000 gallons in any quarter • No backorders and stockouts are permitted
Tru-Rainbow Co. Problem
Thank you !!
Questions??
doc_134710604.pptx
Transportation model is used to schedule shipments from sources to destinations so that total transportation costs are minimized. The ppt talks about its use in Aggregate Planning.
Aggregate Planning with the Transportation method
Outline of the Presentation
• • • • • • Definition of Aggregate Planning Objectives Aggregate Planning Strategies Transportation Model Transportation Method of Production Tru-Rainbow Company Problem
What is Aggregate Planning?
• Provides the quantity and timing of production for intermediate future
– Usually 3 to 18 months into future
• Combines (‘aggregates’) production
– Often expressed in common units
• Example: Hours, dollars, equivalents (e.g., FTE students)
• Involves capacity and demand variables
Objectives of Aggregate Planning
• • • • Meet demand Use capacity efficiently Meet inventory policy Minimize cost
– – – – Labor Inventory Plant & equipment Subcontract
Aggregate Planning Strategies
• Chase Strategy • Level Strategy
– Level Utilization strategy – Level Inventory strategy
• Mathematical Techniques
– Transportation method
Transportation Model
Objective : • Schedule shipments from sources to destinations so that total transportation costs are minimized • Decide where to locate a new facility
From \ To Factory A Factory B Factory C Demand Warehouse A Warehouse B $4 $1 $2 200 $6 $5 $8 400 Warehouse C $2 $3 $4 300 Supply 100 300 500 900
Transportation Method of Production
• Helpful in determining anticipation inventories • More useful in manufacturers production plan than service providers staffing plan • Assumptions
– Demand forecast available for each period
– Work level plan for regular time
– Capacity limits on overtime and subcontracting
Transportation Method
Tru – Rainbow Company Problem
Tru- Rainbow’s Manufacturing manager wants to determine the best production plan using the above table
• • • • • • Current Inventory – 250,000 gallons Ending Inventory – 300,000 gallons Regular time cost -$1 /unit Overtime Cost - $1.50 /unit Subcontracting Cost - $ 1.90/unit Inventory holding cost - $.30 /gallon/quarter
Tru- Rainbow Company contd..
QUARTER 1 DEMAND Capacities Regular time Overtime Subcontracting 450 90 200 450 90 200 750 150 200 450 90 200 2100 420 800 300 2 850 3 1500 4 350 TOTAL 3000
Tru- Rainbow’s Manufacturing manager wants to determine the best production plan using the above table .
The Constraints
• Maximum allowable overtime/ quarter = 20% of regular time capacity in that quarter • Subcontractor can supply a maximum of 200,000 gallons in any quarter • No backorders and stockouts are permitted
Tru-Rainbow Co. Problem
Thank you !!
Questions??
doc_134710604.pptx