FORMULA:
- Total production(TP) = ∑Forecast demand + Back order + Ending inventory – Opening inventory
- Annual Total Production(ATP) = TP/# of working days @ period
- Ending inventory = Opening inventory + Production – Forecast demand
- TP backlog = ∑Forecast demand + Opening backlog – Ending backlog
- Ending backlog = Opening backlog + Forecast demand - Production
PROBLEM
1) Production Leveling
Opening Inventory = 100cases
Ending Inventory =80cases
|
Period
|
1
|
2
|
3
|
4
|
5
|
Total
|
|
Forecast (Cases)
|
110
|
120
|
130
|
120
|
120
|
600
|
|
Production
|
116
|
116
|
116
|
116
|
116
|
580
|
|
Ending Inventory
|
106
|
102
|
88
|
84
|
80
|
460
|
a) how much should be produced each period?
Answer:
Total Production (TP) = 600+80-100 = 580 cases
Average Total Production (ATP) = 580/5 = 116 cases
b) What is the ending inventory for each period?
Answer:
Ending Inventory = Open Inventory + Production - Demand
1 = 100 + 116 -110 = 106
2 = 106 + 116 - 120 = 102
3 = 102 + 116 - 130 = 88
4 = 88 + 116 - 120 = 84
5 = 84 + 116 - 120 = 80
2)
Opening Inventory = 150 units
Ending Inventory = 250 units
|
Month
|
Aug
|
Sept
|
Oct
|
Nov
|
Dec
|
Total
|
|
Working Days
|
10
|
20
|
15
|
21
|
27
|
93
|
|
Forecast Demand
|
225
|
230
|
218
|
255
|
274
|
1202
|
|
Planned Production
|
140
|
280
|
210
|
294
|
378
|
1302
|
|
Planned Inventory 150
|
65
|
115
|
107
|
146
|
250
|
683
|
a) Total Production (TP) = 1202 + 250 - 150 = 1302 units
Average Total Production (ATP) = 1302 / 93 = 14 units/day
Production Each Month:
Aug = 10 x 14 = 140
Sept = 20 x 14 = 280
Oct = 15 x 14 = 210
Nov = 21 x 14 = 294
Dec = 27 x 14 = 378
b) Ending Inventory in each month
Ending Inventory = Open Inventory + Production - Demand
Aug = 150 + 140 - 225 = 65
Sept = 65 + 280 - 230 = 115
Oct = 115+ 210 - 218 = 107
Nov = 107 + 294 - 255 = 146
Dec = 146 + 378 - 274 = 250
3) Backlog
Opening Backlog = 900 units
Backlog is to be reduced = 200 Units
|
Week
|
1
|
2
|
3
|
4
|
5
|
6
|
Total
|
|
Forecast Demand
|
600
|
700
|
700
|
700
|
600
|
500
|
3800
|
|
Production
|
750
|
750
|
750
|
750
|
750
|
750
|
4500
|
|
Projected Backlog
|
750
|
700
|
650
|
600
|
450
|
200
|
3350
|
a) Total Production Backlog = ∑ Forecast Demand + Open Backlog - Ending Backlog
= 3800 + 900 - 200
= 4500 Units
ATP Backlog = 4500 / 6 = 750 Units
b) Ending Backlog = Opening Backlog + Forecast Demand - Production
1 = 900 + 600 - 750 = 750
2 = 750 + 700 - 750 = 700
3 = 700 + 700 - 750 = 650
4 = 650 + 700 - 750 = 600
5 = 600 + 600 - 750 = 450
6 = 450 + 500 - 750 = 200
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