Aggregated Production Planning Problem
Precision Transfer Incorporated makes more than 300 different products, all precision gears. The operations to make them are all similar, but the time and materials required are somewhat different. An aggregated gear is made as a kind of weighted average of the real gears and is referred to as a standard gear. The forecasted demands for the standard gear for the next 6 months are given in the table below. The number of days in each of the months is also given in the table.
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Last year, Precision made 41383 gears of various kinds. There were 260 working days and an average of 40 workers. The production costs, excluding labour, do not change during the time horizon. Inventory holding cost is stipulated to $5 per unit per month. At the beginning of any month new workers can be hired at a cost of $450 per worker and workers can be fired at the cost of $600 per worker at the end of any month. At the end of the previous year the number of workers was 35. Each worker is paid $15 per hour and is paid for 8 hours per day. You can assume that the starting and the ending inventories are zero. No overtime, back-orders or sub-contracting are allowed as a starting point.
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