Submitted To: Prof Ashis K Chatterjee Submitted By: Group 3 Vivek Vinayak Deshmukh (vlmp /06/ 09) Chetan

Girijashankar Patil (vlmp /06/ 16) Ravi Chandrawanshi (vlmp /06/ 21) Sharad Shanmukhasa Katwa (vlmp /06/ 27) Sitikantha Das (vlmp /06/ 28) Sridhar Prasad V (vlmp /06/ 29)
1

ABC Company
Product: Electrical Stoves
Objective : Optimize production Output Plan & Workforce level plan to result into most economic operation.

Problem 7 : Planning for mass production

Option 1: Equal Production Distribution
Total production demand (X) = sum of monthly demands = 81000 units Average production per month (x) = 81000/12= 6750 units Labour required for 6750 units per month: Through put time for stove assembly = sum of all element times = 30.7 min Hence no of workers required = monthly demand / through put time = 6750/30.7 = 17.27 Since number of workers cannot be fractional we need 18 workers per month.

Inventory calculation: let I1, I2, I3 ..I12 be inventory for months from Jan to Dec respectively. X = Average production per month. d1, d2, d3, , d12 be demand for each month from Jan to dec respectively. Inventory per month = Monthly prod monthly demand + previous inventory

Then I1= x-d1+I0 I2= x-d2+I1 I3=

Inventory carrying cost for Jan= (I1*0.5* 50*0.2/12) Calculate inv carrying cost for each month. Total inventory cost = Sum of all inventory costs.
4

Similarly shortages are calculated for each month and summation of shortage cost will give total shortage cost. Worker cost = no of workers / month * 12 * labour rate = 18*12* 600= Rs 129600 /Total cost= inventory carrying cost+ shortage cost + Labour cost. = 10937+1132500+129600 = 1273028 Hence for equal production distribution total cost is Rs 1273028/-

OPTION 2: Variable Production Option

Let there be variable production x1, x2, x3,.., x12 for months Jan to Dec respectively. Let there be variable no of workers per month L1, L2, L3,., L12 Inventory cost and shortage cost is calculated as mentioned in previous cost.

Labour cost = sum(monthly wages + lay offs + training charges)

Total cost = Sum(inventory cost + shortage cost + Labour cost) Minimize Total cost by changing variables x1, x2, x3,.., x12 for following constraints: x1 + x2 + x3 +..+ x12 >= 81000; x1, x2, x3, .., x12 >= 0 & integer; Note: No of workers required cannot be fractional and taken as next higher whole number.
6

The solver has optimized the equation and has given total value of Rs 138850/- and production numbers same as that of demand. In order to minimize cost it keeps on changing the number of workers per month.

Conclusion: Based on evaluation of option 1 & 2, it is evident that ABC company should go for option 2 which says that meeting the monthly demand is best way to reduce cost and plan number of workers accordingly.