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Tiff7859
Tiff7859
23.12.2020 • 
Business

Dire Wolf Industries (DWI) Dire Wolf Industries manufactures various pieces of equipment for use in winter sports such as skiing, snowshoeing, and dog sledding. They have a single manufacturing facility located in the Haight-Ashbury area on San Francisco, CA that supplies their products across the world. While they have many different SKUs, for the purpose of aggregate planning they have converted all items into a common flow unit. The costs have also been standardized.
They want to setup an aggregate plan for the next 12 months out to minimize total cost.
The details are shown below:

The levers that they have available are:
Size of workforce – Hiring and firing each month is permitted at a cost
Overtime Hours – Employees can work beyond normal hours at extra cost
Inventory Level – Inventory at the end of each month
Backorder – Customers are willing to wait for delivery
Production Level – How many units to manufacture with internal resources
Outsourced – how many units to manufacture using a contract manufacturer

The demands for the next 12 months are:
January February March April
2800 2800 1000 920
May June July August
780 950 1050 1200
September October November December
2000 2500 3000 2800

Other details for formulating cost structures and constraints are provided below:

1. Now, assume yourself as a supply chain professional working for Dire Wolf
Industries (DWI) and formulate an aggregate planning model to help assist the
Chief Operating Officer (COO) and the Vice President of Sales to agree upon the
next 12 months plan.

2. If the outsourcing cost reduces to $95/unit, and the maximum number of units that
can be outsourced is 800 per month, then what would be the total cost for the
planning?

Solved
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