Aggregate production planning with linear programming: a case study

Abstract

The aim o f A g g r e g a t e P r o d u c t io n P la n n in g i s t o b a la n c e th e e x p e c te d denuind and s u p p ly f o r a company. I f demand i s g iv e n , p ro d u c t io n r a t e s , w o rk fo r c e s i z e s , and in v e n t o r y l e v e l s a r e d e te rm in ed f o r e v e r y p e r io d in th e p la n n in g h o r iz o n in o rd e r t o m in im ize th e t o t a l p r o d u c t io n c o s t . In t h i s s tu d y . A g g r e g a t e P r o d u c t io n P la n n in g i s a p p l i e d t o a sm a ll company th a t p ro d u c e s s p a r e p a r t s f o r T o fa ^ and F o rd f a c t o r i e s . L in e a r Progranun ing i s one ap p ro a ch t o s o l v in g th e A g g r e g a t e P ro d u c t io n P la n n in g p ro b lem w ith l i n e a r c o s t fu n c t io n s . T h is s o p h i s t i c a t e d t e c h n iq u e , wh ich i s v e r y s im p le t o a p p ly , y i e l d s a c c u r a t e r e s u l t s in a r e l a t i v e l y s h o r t p r o c e s s in g tim e . In s o l v in g t h i s p ro b lem , th e r e q u i r e d d a t a f o r th e company a r e c o l l e c t e d and p r o c e s s e d . The c o s t fu n c t io n s a r e fou n d t o be l i n e a r wh ich e n a b le s th e u se o f LP. F i n a l l y , s e n s i t i v i t y a n a ly s i s i s p e r fo rm ed t o f i n d th e a l lo w e d ra n g e s f o r demand f o r e c a s t s a s w e l l a s r e g u l a r and o v e r t im e w o rk in g h o u rs .