'. RMIT Supply Chain Analysis and Design Page 1 of3 UNIVERSITY Assignment 1 Case Analysis Case: AGGREGATE PLANNING Denition In these models, the workforce level is allowed to change each period through the hiring and ring of workers. Such models, where we determine workforce levels and production schedules for a multiperiod time horizon, are called aggregate planning models. Case Renova company is a manufacturer of fancy bags in Melbourne. The demand for the next four months is forecasted as below: Month 1 Month 2 Month 3 Month 4 3000 5000 2000 1000 500 bags are on hand at the beginning of month 1, and the company has 20 workers. The wage of a worker is $1500 per month. The standard working time for a worker is up to 160 hours per month before he or she receives overtime. The maximum overtime for a worker is 20 hours per month and is paid $13 per hour for overtime labour. It takes four hours of labour and $15 of raw material to make a bag. At the beginning of each month, workers can be hired or red. Each hired worker costs $1600. and each red worker costs $2000. At the end of each month, a holding cost of $3 per bag left in inventory is incurred. Production in a given month can be used to meet that month's demand. Renova wants to use LP to determine its optimal production schedule and labour policy. Additional info: I The data on the current number of workers, the regular hours per worker per month, the regular hourly wage rates, and the overtime hourly rate, should be well known. The maximum number of overtime hours per worker per month is probably the result of a policy decision by management or a clause in the workers' contracts. . The costs for hiring and ring a worker are not trivial. The hiring cost includes training costs and the cost of decreased productivity due to the fact that a new worker must learn the job. The ring cost includes severance costs and costs due to loss of morale. Neither the hiring nor the ring cost would be simple to estimate accurately, but the human resources department should be able to estimate their values. a The unit production cost is a combination of two inputs: the raw material cost per bag and the labour hours per bag. The raw material cost is the going rate from the supplier(s). The labour per bag represents the \"production function"the average labour required to produce a unit of the product. The operations managers should be able to supply this number. . The big picture for aggregate demand planning model is presented as below: RMIT Supply Chain Analysis and Design Page 2 of 3 UNIVERSITY Initial number of workers Workers from Hiring cost per Total hiring Workers previous month worker cost hired Total regular- Regular wages per time wages worker per month Workers available after Workers Firing cost per Total firing Workers hiring and firing Maximum overtime Maximum overtime hours per worker cost fired labour hours available worker per month Regular hours per Regular-time hours Overtime labour Total overtime Overtime wage worker per month available hours used wages rate per hour Labour hours per Workers to bag production Total hours for Minimise total cost (sum production bag of costs in gray) Raw material cost per Total raw Bags Production bag material cost produced capacity Initial inventory of Inventory after Forecasted bag production bags production demand Holding cost per bags per Total holding Ending month cost inventory'. RMIT Supply Chain Analysis and Design \"63 f3 UNIVERSITY Requirements: 1. Developing Mathematical Model Develop a LP model that relates workforce and production decisions to monthly costs, and to nd the minimum-cost solution that meets forecasted demands on time and stays within limits on overtime hours and production capacity. (6 marks Word Document) 2. Reproducing the model in Excel and solving the problem Formulating the decision variables, objective function, and constraints in Excel; Setting the Solver parameters; Solving the problem; Interpret the result and providing the schedule in the Word document. (10 marks Excel & Word Documents) 3. The company's CEO is asking your recommendation regarding the initial number of workers (currently 20). The CEO said, \"there is an opportunity to begin the process by selecting any initial number of workers between 0 and 200". Investigate the relationship between the initial number of workers and the total cost (preferably by using a graph) and provide your recommendation regarding the best value or the best range of initial number of workers. Explain how changes in initial number of workers impacts the total cost value. (4 marks Word Document)