Month Demand Given

Jan. 1000 Plant operates 20 days a month, 8 hours each day

Feb. 1100 One person can assemble a phone every 10 minutes
March 1000 Labor Cost = 20 euros per hour
April 1200 Overtime = 50 percent premium
May 1500 current employers = 1,250 workers
June 1600 component cost for each cellphone = 20 Euros
July 1600 inventory carrying cost = 3 Euros per phone per month
Aug. 900 No lay off policy
Sep. 1100 Overtime limit = 20 hours per month per employee
Oct. 800 starting inventory = 50,000 units
Nov. 1400
Dec. 1700

Decision Variables Parameters

Wt = # of workers employed in month t (t = 1,..,12) Dt = # of units demanded in ti

Ot = # of hours of overtime in month t (t = 1,..,12)
It = # of units held in inventory at the end of month t (t = 1,..,12)
Ct = # of units subcontracted in month t (t = 1,..,12)
Pt = # of units produced in month t (t = 1,..,12)
Ht = # of workers hired in month t (t = 1,..,12)
Lt = # of workers fired in month t (t = 1,..,12)

1. Assuming no backlogs, no subcontracting, and no new hires, formulate the aggregate planning problem to mini

Objective Function

Minimize

Subject to
Inventory Constraints: Production constraints:

Overtime Constraints Workforce Constraints:

2. Assume Skycell aims for a level production schedule, what changes you need to make in your formulation?
We add a new constraint: Pt <= 1291667 t = 1,…12 and remove the non negative constraint for inventory since bac

3. Now Skecell has a team of 50 people who are willing to work as seasonal works. The cost of bringing them is 800 euros pe

Ht = # of workers hired in month t (t = 1,..,12)

Lt = # of workers laid-off in month t (t = 1,..,12)

Objective Function:
Minimize:

Subject to
Overtime Constraints: Production Constraints

Temporary Workforce constraints:

rs each day
ry 10 minutes

20 Euros
hone per month

er employee

Parameters

Dt = # of units demanded in time period t (t = 1,…12)

ate planning problem to minimize the total cost.

on constraints:

e Constraints:

our formulation?
onstraint for inventory since backlogs are allowed in level production.

of bringing them is 800 euros per employee and the layoff cost is 1,200 euros per employee. How do you change your formulation in pa

Production Constraints
hange your formulation in part 1?
Solve part 1 in excel. Is there any value for management to negotiate an increase of allowed overtime per employee p

Wt Ot It Pt
Period # Workforce Overtime Inventory Production
0 1250 50,000 0
1 1250 0 50000 1000000
2 1250 0 150000 1200000
3 1250 25000 500000 1350000
4 1250 25000 650000 1350000
5 1250 25000 500000 1350000
6 1250 25000 250000 1350000
7 1250 25000 0 1350000
8 1250 0 0 900000
9 1250 0 50000 1150000
10 1250 0 450000 1200000
11 1250 25000 400000 1350000
12 1250 25000 50000 1350000

Period Regular time Overtime Inventory Material

1 € 4,000,000.00 € 0.00 € 150,000.00 € 20,000,000.00
2 € 4,000,000.00 € 0.00 € 450,000.00 € 24,000,000.00
3 € 4,000,000.00 € 750,000.00 € 1,500,000.00 € 27,000,000.00
4 € 4,000,000.00 € 750,000.00 € 1,950,000.00 € 27,000,000.00
5 € 4,000,000.00 € 750,000.00 € 1,500,000.00 € 27,000,000.00
6 € 4,000,000.00 € 750,000.00 € 750,000.00 € 27,000,000.00
7 € 4,000,000.00 € 750,000.00 € 0.00 € 27,000,000.00
8 € 4,000,000.00 € 0.00 € 0.00 € 18,000,000.00
9 € 4,000,000.00 € 0.00 € 150,000.00 € 23,000,000.00
10 € 4,000,000.00 € 0.00 € 1,350,000.00 € 24,000,000.00
11 € 4,000,000.00 € 750,000.00 € 1,200,000.00 € 27,000,000.00
12 € 4,000,000.00 € 750,000.00 € 150,000.00 € 27,000,000.00

Total Cost € 360,400,000.00

allowed overtime per employee per month from 20 hours to 40 hours?
Constraints

Demand WorkforcCapacity Inventory Overtime

1,000,000 1250 200000 0 25000

1,100,000 1250 0 0 25000
1,000,000 1250 0 0 0
1,200,000 1250 0 0 0
1,500,000 1250 0 0 0
1,600,000 1250 0 0 0
1,600,000 1250 0 0 0
900,000 1250 300000 0 25000
1,100,000 1250 50000 0 25000
800,000 1250 0 0 25000
1,400,000 1250 0 0 0
1,700,000 1250 0 0 0
Overtime
Solve part 1 in excel. Is there any value for management to negotiate an increase of allowed overtime per employee per month from 20 hours to 40 hours?
If the number of overtime hours per worker were to be increased from 20 to 40 the total cost would decrease, hence it is advantageous to do so.

Wt Ot It Pt
Period # Workforce Overtime Inventory Production Demand
0 1250 50,000 0
1 1250 0 0 950000 1,000,000
2 1250 0 0 1100000 1,100,000
3 1250 0 200000 1200000 1,000,000
4 1250 0 200000 1200000 1,200,000
5 1250 50000 200000 1500000 1,500,000
6 1250 50000 100000 1500000 1,600,000
7 1250 50000 0 1500000 1,600,000
8 1250 0 0 900000 900,000
9 1250 0 0 1100000 1,100,000
10 1250 0 400000 1200000 800,000
11 1250 8333.33333333333 250000 1250000 1,400,000
12 1250 50000 50000 1500000 1,700,000

Period Regular time Overtime Inventory Material

1 € 4,000,000.00 € 0.00 € 0.00 € 19,000,000.00
2 € 4,000,000.00 € 0.00 € 0.00 € 22,000,000.00
3 € 4,000,000.00 € 0.00 € 600,000.00 € 24,000,000.00
4 € 4,000,000.00 € 0.00 € 600,000.00 € 24,000,000.00
5 € 4,000,000.00 € 1,500,000.00 € 600,000.00 € 30,000,000.00
6 € 4,000,000.00 € 1,500,000.00 € 300,000.00 € 30,000,000.00
7 € 4,000,000.00 € 1,500,000.00 € 0.00 € 30,000,000.00
8 € 4,000,000.00 € 0.00 € 0.00 € 18,000,000.00
9 € 4,000,000.00 € 0.00 € 0.00 € 22,000,000.00
10 € 4,000,000.00 € 0.00 € 1,200,000.00 € 24,000,000.00
11 € 4,000,000.00 € 250,000.00 € 750,000.00 € 25,000,000.00
12 € 4,000,000.00 € 1,500,000.00 € 150,000.00 € 30,000,000.00
Total Cost € 356,450,000.00
om 20 hours to 40 hours?
dvantageous to do so.
Constraints

WorkforcCapacity InventoryOvertime

1250 250000 0 50000

1250 100000 0 50000
1250 0 0 50000
1250 0 0 50000
1250 0 0 0
1250 0 0 0
1250 0 0 0
1250 300000 0 50000
1250 100000 0 50000
1250 0 0 50000
1250 0 0 41666.67
1250 0 0 0
Solve part 2 in excel.

Wt Ot It Pt
Period # Workforce Overtime Inventory Production Demand
0 1250 50,000 0
1 1250 15278 50000 1291667 1,000,000
2 1250 15278 241667 1291667 1,100,000
3 1250 15278 533334 1291667 1,000,000
4 1250 15278 625001 1291667 1,200,000
5 1250 15278 416668 1291667 1,500,000
6 1250 15278 108335 1291667 1,600,000
7 1250 15278 0 1291667 1,600,000
8 1250 15278 0 1291667 900,000
9 1250 15278 74999 1291667 1,100,000
10 1250 15278 566666 1291667 800,000
11 1250 15278 458333 1291667 1,400,000
12 1250 15278 50000 1291667 1,700,000

Period Regular time Overtime Inventory Material

1 € 4,000,000.00 € 458,335.00 € 150,000.00 € 25,833,340.00
2 € 4,000,000.00 € 458,335.00 € 725,001.00 € 25,833,340.00
3 € 4,000,000.00 € 458,335.00 € 1,600,002.00 € 25,833,340.00
4 € 4,000,000.00 € 458,335.00 € 1,875,003.00 € 25,833,340.00
5 € 4,000,000.00 € 458,335.00 € 1,250,004.00 € 25,833,340.00
6 € 4,000,000.00 € 458,335.00 € 325,005.00 € 25,833,340.00
7 € 4,000,000.00 € 458,335.00 € 0.00 € 25,833,340.00
8 € 4,000,000.00 € 458,335.00 € 0.00 € 25,833,340.00
9 € 4,000,000.00 € 458,335.00 € 224,997.00 € 25,833,340.00
10 € 4,000,000.00 € 458,335.00 € 1,699,998.00 € 25,833,340.00
11 € 4,000,000.00 € 458,335.00 € 1,374,999.00 € 25,833,340.00
12 € 4,000,000.00 € 458,335.00 € 150,000.00 € 25,833,340.00
Total Cost € 372,875,109.00
Constraints

WorkforcCapacity Inventory Overtime

1250 0 291,667 9722

1250 0 0 9722
1250 0 0 9722
1250 0 0 9722
1250 0 0 9722
1250 0 0 9722
1250 0 -199,998 9722
1250 0 391,667 9722
1250 0 116,668 9722
1250 0 0 9722
1250 0 0 9722
1250 0 0 9722
Now Skycell has a team of 50 people who are willing to work as seasonal works. The cost of bringing them is 800 euros per employee and the layoff cost

Wt Ht Lt Ot It
Period # Workforce Overtime Inventory
0 1250 50,000
1 1250 0 0 0 0
2 1250 0 0 0 0
3 1250 0 0 0 0
4 1250 0 0 0 0
5 1250 0 0 0 0
6 1250 0 0 0 0
7 1250 0 0 0 0
8 1250 0 0 0 0
9 1250 0 0 0 0
10 1250 0 0 0 0
11 1250 0 0 0 0
12 1250 0 0 0 50000

Period Ht Lt Regular time Overtime Inventory

1 € 4,000,000.00 € 0.00 € 0.00
2 € 4,000,000.00 € 0.00 € 0.00
3 € 4,000,000.00 € 0.00 € 0.00
4 € 4,000,000.00 € 0.00 € 0.00
5 € 4,000,000.00 € 0.00 € 0.00
6 € 4,000,000.00 € 0.00 € 0.00
7 € 4,000,000.00 € 0.00 € 0.00
8 € 4,000,000.00 € 0.00 € 0.00
9 € 4,000,000.00 € 0.00 € 0.00
10 € 4,000,000.00 € 0.00 € 0.00
 11 € 4,000,000.00 € 0.00 € 0.00
12 € 4,000,000.00 € 0.00 € 150,000.00

Total Cost € 346,150,000.00

mployee and the layoff cost is 1,200 euros per employee. After doing this we get the total cost = €346,150,000.

Constraints
Pt
Production Demand Wt Ht Lt Workforce Capacity Inventory
0
950000 1,000,000 1250 0 0
1,100,000 1,100,000 1250 0 0
1,000,000 1,000,000 1250 0 0
1,200,000 1,200,000 1250 0 0
1,500,000 1,500,000 1250 0 0
1,600,000 1,600,000 1250 0 0
1,600,000 1,600,000 1250 0 0
900,000 900,000 1250 0 0
1,100,000 1,100,000 1250 0 0
800,000 800,000 1250 0 0
1,400,000 1,400,000 1250 0 0
1,750,000 1,700,000 1250 0 0

Material
€ 19,000,000.00
€ 22,000,000.00
€ 20,000,000.00
€ 24,000,000.00
€ 30,000,000.00
€ 32,000,000.00
€ 32,000,000.00
€ 18,000,000.00
€ 22,000,000.00
€ 16,000,000.00
€ 28,000,000.00
€ 35,000,000.00
Overtime

25000
25000
25000
25000
25000
25000
25000
25000
25000
25000
25000
25000