PM 212 Aggregate planning formulas

Steps of process

Do one column at a time from left to right.

NB: Take note of overtime and hiring/firing specifications in question

Units per Worker

UPW = Days per Month × Hours per Day × Units Produced per Hour

Production Required

PR = Demand − Beginning Inventory + Backorders

Production Hours

PH = Production Required / Units Produced per Hour

Workers Required

W = Production Hours / (Days per Month × Hours per Day)

Regular Production

RP = Workers × Days per Month × Hours per Day × Units Produced per Hour

Overtime Production

OP = Overtime Hours × Units Produced per Hour

Total Production

TP = Regular Production + Overtime Production

Ending Inventory

EI = Beginning Inventory + Total Production − Demand

Backorders

BO = Absolute Value of Negative Ending Inventory

Labour Cost

LC = Workers × Days per Month × Hours per Day × Labour Rate per Hour

Overtime Cost

OC = Overtime Hours × Overtime Rate per Hour

Inventory Cost

IC = Ending Inventory × Holding Cost per Unit

Backorder Cost

BC = Backorders × Penalty Cost per Unit

Hiring Cost

HC = Number of Workers Hired × Hiring Cost per Worker

Firing Cost

FC = Number of Workers Fired × Firing Cost per Worker

Total Cost

TC = Labour Cost + Overtime Cost + Inventory Cost + Backorder Cost + Hiring Cost + Firing Cost