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             PRODUCTION PLANNING PROBLEMS
                IN ENGINEERING INDUSTRY
                   (A GOAL          APPROACH)
                          PROGRAMT'||}|G



                         A     EDISSEFT1nAITI'ON
                   SUBMI.TTED IN    PARTIAL FULFILMBNT OF THE
                   REQUIREMENTSFOR THE AWARD OF THE DEGREE
                                     OF

                              fflagter o[ 6,e*lnologP
                                         in
                             ,ff[erhantuI          g
                                          S,ngineerin



                                             BY

                                          A
                             PAilKAfCHAtlDlf ttzltt


                                   U nder the gui danco of

                                Prof. S.K.SHARMA




                      rtment o[ Sler[anital @ngineerfng
                   @epa
                      Begional@ngtneertng   6otlege
                                      -
                          &uruh*tletra 132ttg
t?




                                   CERT        _rJ J-.C-A-T-E-



                                           that the dissertation                entitred'
                rt    is certified

     ' },ROIICTION PLPJ{I.II}.G        IN             INruSTRY
                              PITOBLE]IS ENGII'IEERING
                               t                                                       by
     A G.AL pRocRAl/$rNGAppRoAcH i. s being submitted

                                    partial                    fuif ilment of M'Tech'
     Panka.i char:cina 7B2f Bg, i.n
                     ,
                                                of Kunrkshetra
     in l{echanic a} Brgin eering Degree course
                                                                 o f h i s e w T lw o r k c a r r i e d
     u n i v e r s i t y , K u r u ks he t r a i s a r e c o r d

     out bY h:-m under mY guidanc e'


                                    ernbo ed in
                                        di              tJr i. s di s sertation       ha s no t been
                 Th e matter

                       previou sl y f or t[ e award of               any otir er degree'
      sutrnltted


      Plac e         Ktrruk shetra

      Dated
                     g'3'11                                                   Gitrre''Y
                                                                      ( s. K. 9tarma )
                                                                  Assistant Profes$cr-t
                                                                  Itechanical Engg. DeparLnerrt'
                                                                  Regional thgin eeri19 ColIe-Q€,
                                                                  f.unrk shetra-132 1 1 9.




                                                        --1-
_l_.c_F_N_o-,$rJL G E M E N T S
                                                ED



          I have great pleasure                in     xecording my profound gratitude

                          SharTna,Assistant             Prof essor,      Mechanical             Rrgin eering
to prnf . s.K.
                                                            CoIlege,    Kurukshetra'             for   his
Departrnent,           Regional Engineering

lnvaluab}eguidanC€lconstantencouragernentandimmensehelpgiven
                                          r a o k , w hi c h r e v e a r s h l s
                                              r
at each and every stage of persuing this
                                                of    Production         Planning.             His inclslve
vast     knowledge in the fierd
                                  discussions           and valuable         suggestions arways
comments, fruitful

edif ied me vrith j est              to carryout            my work f irmly'


                 am very thankful           to Prof . B.s.          Gillr     chairmanl           Departrnent
            I

of Mechanicar Engineering,                     Regionar Engineering college t

                                             facilities           to carryout          this      work.
Kurukshetra             for providing


                           t h a n k s a r e d u e to       Er . L.M.   Sain i r Er.           Rai e sh Jan 9ra"
            becial
                                                              f o r th eir   kind heJ'P during               mY
 Er.    R . S . B h a t i a a n d E l . D . K ' Jain

 computer lab.            work.


                In addition ' I am highly               thankful        to aII my friends

                                                              who helped
 e s p e ci a l l Y     to Arvind ' Rajender, Vinod and Rajiv
                                      out mY dissertation               work.
 me a lot             in carrying


 PIace :              Kunrkshetra

 Dated z                8 Z   t2tl                                           i)
                                                                         t n,ffcHAI{D}JA
                                                                                  7 8 2 /B e

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                              _C_.OJIIJ_E-N-T-S-

                                                                          Paqe


                                                                           1
      CERT ICATE
         IF
                                                                           11
      ACKNC'T{L
             EDGEMENTS
                                                                           111
      COI'ITENTS
                                                                           Y
      LIST OF NOTATIONS
                                                                           vl1
      ABSTRrcT

      CHAPTER      I     INTROUJCTION                                      1


          1.1            AGGREGATEPRODUCTIONPLN{NING                       2
                         ( cEt'tERAL
                                   Fonlvt)
          1;2            SMPLEST STRTJCTURE AGGREC'ATE
                                            oF
                                                                           
                         PLAI.INING PROBLF{

          1.3            MULTI STAGE AGGREGATEPLANINING
                         SYSTEM


      CHAPTER I1         LIT ERATUREREVI ET{                                   6

          2.1            DESCRIPTIVE MODELS                                    6

                2.1.1    Th e Management Coefficient            lvlodel        6

                2.1 .2   The Sequential       ModeJ, of    Gordon              7

                2.1 .3   Simulation     Models                                 7

                                  I{ODEL
                         NORT1ATIVE    S                                       I

                '2.2;1   Aggregate Pfanning Models                             E

                         2.2. 1:1     Exact lvtodels                           I

                         2 .2 .1 .2   H zu ri stlc   Mocie.Is              L2


                                          -1i i-
'r
                                                                                  tj
                                        TO GOAL PRG RAtvlMI'NG
                           INT RODLJCTION
     CHAPTES_:--III
                                                COI{CEPT
                                                                                  L5
         3.1               THE GOAL PROGRAI{MING
                                                 GOAL
         3.2               OBJECTIVE zuNCTlON IN                                  t6
                           PRGRAI/tlvtING
                                                                    OF MULTIPLE
         3.3               RAI'IKING Al'lD WEIC+{ING                              !6
                           CSALS


     cHAPTE_&_:--IV        CoALPR0GMJ{I4INGAsAMATI{EIVIATICAL
                                                                                   18
                           TOOL USED

                                                                                   18
                                                MODEL
           4.1             GBERAL MATTIEMATICAL

           4.2              STEPSoFTHESIMPLEXMETHoDoFG0AL                              t9
                            PROGRAMIVIING
                                                     OF @AL
                            CCI!1zuTERBASED SOLUTION                                   22
                            PRGRA[[MII'IG
                                                                                       2t
           4.4              AI{ALYSIS OF THE COIPUTER0'JTPUT


            -
      CHAPTER v             FOII},ATJLATION PROBLE}/'
                                          OF
                                                                                       26
           5.1              GEI'IERAL
                                                                                       2E
            5.2              PRroRrrY ( r)
                                      ( rr)                                            1t
            5.3              PRToRTTY
                                                                                        'J
            5.4              P r l r O R t ' t Yr r r )
                                               (
                                                                                        58
                             PRToRITY rv )     (
            5.5
                                                                                        39
            5.6              CChISTRATNTS
                                                                                        59
                  5.6-1       Productive            hours      constralnt
                                                                                        q1
                  5 .6.2     6vertime          C o ns t r a i n t
                                                                                            )
                              DI SCUSSION Of-- RESULT
       @
                                                                                            8
       APPEIDIX
                                                                                            b2
                 ES
        REFERET.JC
                                                          -trOO-
LI ST OI. NOTA I ONS



b.             GoaI set bY decision                  maker.
 1

               The cost      for      overtime        hour.

ci             Standard variable                 co st of        pro'dttcing one unit

               of product        i.

c?             C os t i n c u m e d    for       cauying             one unit    of product    i.

,-10           Cost incurred           for       one unit            of product ibackordered
"i
               per peri-od.

    +
Dit            Finished      goods inventory                    of    pnrduct i    in period        t;

Dit            Backorder quantity                 of product            i   in period   t.

     +
Dzt       ,-   Nunber of workers in                  excess of              the desired maximum.


Dit            Number of workexs less                   than the desired maximum.

     +
Dot'D6t        Deviational            variabJes.

     +
Dzt'Dzt        Deviation aI           variable s.

rt             In ven to ry at         th e en d of         t    th Period.

Tt +
t              In ven to ry during               t th Peri o d.

^t
T-             Shortage during               t    Ur Peri-od.

rt-1       -   Inventory        at the end of               (t-t)Ul          perioci.

k              Numl:erof priori              ties.
Nurnber of        goals.
M
             Number of         decision            varlables'
n
             Overtime hours in Period                       t'
ot
             produc tion         rat6       f or    ith    type of motor during
Pit
             tth    period        (aecision             variable)'

                                                          for
Pj           The ple-emPtlve weiqht                              i'

                                                  Ievel    for        pnoduction           rate   co sts'
Pnct         Managenren target
                      t


Pt           Productionrateduringttl:Iperiod'

             M a x i m u r nd e s i r e d    c h a n g e i n w or k f o r c e } e v e l '
Qt

    st        Sales in         t tjr Period'

                                            for     one unit          of motir       i'
    Ti        Hours required


              Efficiency           coeff icient            for    old work€rso
    T1

              Efficlency           coefflcient             for    n e u rw o r k e l s .
    T2

               Efficiency          coefficient             during ovel time hours'
    T3
                                                     during      t th peri-od.
    vlt        size of work force
                                                                 ( t-t ) trt period.
    vtt- t     size     o f w or k f o r c e d u r i n g

               D e ci s i o n v a r i a b l e t o         be found'
    xj

     xt        ChangeinthenumberofworkersinperiodIt'.




                                               -O(rO-




                                                  - v1-
t;
                                                     _A_B_S T R A C T



                            In this      dissertation             an attempt           has been made to
               anaryse the aggregate production                            pranning       of ABc ( tne
               actual, nane has been disguised)                          optimally.          T h e d e n r a n do f
               the nrotors with            diff erent         specificaticns             vrere not constant

               ciuring the pranning horizon                       of one year i.e.            lgg8-89,
               conslsting        of three planning                   perlods.          To meet the fluctu-
               ation    in    d e r n a n da g g r e g a t e p l a n n i n g   model wBs formulated,
               wttich   conc en trates          on determi-nin g which cornblnation of                           t'1.re
               clecision      varjables         like      production           rate,     inventory,        back-
               ordering,       o vertime        etc.      should be utilised               in order        t,o
               optirnally      adj ust th e dernand f Luctuations                        within    the con straints
               if
                    "ny-.

                            The aggregate planning                   model was formulated                in   the
               form of       goals with         different          priorities.            The problem was
               tii en soL.ied by usinc{ 'Computerized                          technique      of   S.[':, Lee to
               soir'e the goal proqraruning problemst.                                 Tne decision        variabLes
               l't'ereobtalned         for    arr     the planrring periods.




                                                             -OoO-




                                                             -vi--




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                                         CHAPTER
                                               -        -       -   F
                                                                              I


                                               INTRODUCTION
                                                     -



                                                            to plan     and con trol       operatlon   s at
                 llo st managers want

                           level      thmugh                  some klnd       of    agglegate    plannlng
       tJre broadest
                                                   of        lndividuar       products     and detaired
       that    by passes detalrs

       sch edr.rrlng of        f ac irlties                 and personn el.          Managernent wourd

       deal wlur        baslc     relevant                  decisions     of programmlng the use of

       resources.         This is       accomplished by revlevrlng pnoiected

                                     ancl by settlng                    activlty       rates    that can be
       emplolm€rrt ievels

                 wlth     ln     a glven           ernproyment rever                by varylng    hours worked-
       varied

                                                        decisions         have been made for         the
                 firce these baslc

       upcomlng period,             detailed                 schedulinE           can ploceed at a lowel

                                                                        the broad pran.           Finalry     ra st
       Iever    wittr    ln the con strain ts of
                                      activlty                 levels     need to be made with          the
       minute changes ln

        realisation       of thelr            possible              effects        on the cost of changing

        production       level       and on inventory                     co sts if     th ey are a part       of

        th e sy st,em.
I
            !




            .l @
                                                                                                                         2
                i

                    1.1     AC€ EC"ATEPROI'qIION PLAI{NING                       GENERAL FORM



                                The aggregate prodtrctlon plannlng pmblem tn lts                                most

                    general form can be stated as follows                           z


                                A set of forecasts              of   denrandfor           each period       1s glven -

                                (a)          The size of work force'                Tlt

                                 ( b)        The rate        of Production ' Pt

                                 (c)         The quantitY         striPPed'         St


                                 The resultlng           |n ventory per monti              can be determln ed as

                    follows        -

                                             rt          It_t    +Pt-       St.


                                 The Problsn          is usually         tesolved       analytically        by mininizing

                    th e exp ec ted total             cost ovel a given plannlng                 horizon       conslsting

                    of    some o r all        of     tfr e f o lloning     co st component s.
g
.,}.j


 :$
,.$                               (a)        The cost of         regular     pay-roIl         anci over-time-
rrfi
s                                 (r )       Th e co st of       ch anglng       tJr e p ro duc tion    rate    f rom

$
*
                                             one period         to tJre next.

                                                                                 inventotY.
.,ry                              (c )       The cost of carrYing
#r
 IP
                                  (o)        Co st     of, sho rtag e s re su I tlng         f rom no t meeti.ng
fr
,#
 :l$
 ri,                                          th e dernanci.
 #
 i,!
 ".!
   I
  'i
   :i
                                  Th e soluiion         to    tli e p robl sn i s simpl if ied         lf    a verage
       ir
                     d e r n a n co v e r
                                  i         the planrring horizon           is    expected t,o be constant.
3


           So th e cornplexity ln tfr e aggregate pro chrc
                                                         tion plannlng

ppoblem arlses frrrm the fact                    that ln most sltrrations demand

per period i s not constant but are subj ected to substantlal

f 1uctuatiop s.         The question arises as to how tfrese f luctuations

should be absorbed.               Assuming tjr at th ere ar€ no pr,oblem ln

recelvlng       a constant        supply of raw material                    and labour at a

f lx ed vjage rate , th e problen may be seen by considering                                        ttr ese

pure alternatlves              of responding to such fluctuations.

(a)         A increase         in orders        is met by hiring              and a decrease ln

            orders     is   accompllshed by lay-offs.


 (b)        Mai6tenance of constant work force,                            adjustlng         production

            rate     to orders         by wo rking       o vertinre      or undertime           acco rdingly .


 (c )       Maintenance of             a c o n s t a n t v l o r k f o r c e a nd c o n s t a n t

            t'ro duc tion      rate,      dllor^ring inventorie             s and order         bac klog s

            to fluctuate.


 ( d)       Mainten anc e of con stan t wo rk f orc e and meet th e f luc tu-

            a tion     in   dern ci th ro ugh p I ann ed b ac k log s o r* by subcon t-
                                an

             ra ting                   d.
                        exc e s s dernan


             In gmera]         none of        t.|re above alternatives                will    prove best

 but     some cornbination of              then can cio. Order f.luctuations                         showed

 in     g eneral     be ab so rbed partly            by in vento ry , partly              by o vertirre

 and partly          by hiring      and layof f s anci the optimum ernphasis on

 the se f actcrs        wiII     d e p e n c lu p o n t h e c o s t s i n a n y p a r t i c u l a r      f acto ly.
. l




                                                                                                   4
I
t




          1.2              STRUCTURE
                  SIIV1PLEST        OFjTSGREGATEPLAIININ9 PROBL4I


                      The structure      of the aggregate planning problem ls
          represented by the single            stage sy stqn 1; e; the plannlng
          horlzon ls only one perlod ahead.                   The stage of the system
          at the end of period ls def in ed by Ho, Po and Io , the aggre-
          gate work f orce si zer prcduction ox activity                   rate and inven-
          tory    level      respectively.   The ending state conditions become
                                                                   '
          the initj.al        condition s for the upcoming period.   Wehave a
          forecast       of the requirements for         the upcoming period through

          s o m ep r c c e s s .   The decision mademay call            for hiring    or laylng
          of f personnel,          tJrus expanding or contracting          the ef f ectlve

          capacity       of tJre pro duction systern.          The work force        size together
          wi th th e ciec slon on ac tivlty
                         i                           rate     during th e perlod th en deter-
          min es th e *requi red amount of o vertiffi€ r in ventory level s or back
          orderlng whether or not a shift               must be addedor deleted and
          other posslble changes ln operatlng pmcedure.


          1 .3                       .PLAI.ININGSYSTEMS
                  MULTISTAGE AGGREGATE


                      In this      type of planning     system, our obj ectlve          ls   to
          make the declsions            concerning   the work force         slze and production

          rate    f or the upcoming periods.            In    doing so, howeverr w€ conslder

          the     sequence of projected        decisions       in    relation   to forecasts       and
          their     cost     effects.     The decislon       for    the upcorning period      is   to
          be affected          by the future   period    forecasts       and the decision
5   I




                                                   t j r e s e q u e n c eo f
     process must consider the cost effects of
     decisrons.    The connecting rlnks between the severar stages
                                           at the end of one p.eriod
     are the lrfr P and I Values tJrat are
     and the beglnning of the next.     The feedback roop frorn tjre
                                                         proc edure to obtain
     decision process may invorve some lterative
                                                                              be
     a sotutloD.    The sequential nature of tjre decislons should
                                                or wxong onry in terms
     kept in mind. Arr decisions are right
                                                            a period of time'
     o f t h e s e q u e n c eo f d e c i s i o n s o v e r




                                         -OO0-




j
I
I
 I
a1
It
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                                                                                                                         t;


                                                g_u.a8.tgE.- Ir

                                                 LITERATURE REVIEN
                                                 -
                                                     t-^-      ,




                       The pro duc tion              planning           problenr i s conc erned with

                               the optimal                  quantlties        to be prcduced          in order
          spec if ying
                                              a sp ec if ied planning                  hori zon.       Many model s t
          to meet denand for
 
ll


'l


                                                      pros and cons,             have been deveroped to
          each of which has its

          help    to    solve thls            Ploblem'

                                                                         in   the llterature          differ     ln
                       These rnodels introduced
                                                                               and methodorogy.            Howevert
          their     orientatiorl           r scope, contents

          we can classify               these models ln                    two maln catagorles

          ciescrjPtlve           and normative'                                          '



          2.1     pEqpRrPTrVE
                            MODELS

                                               models aim of                  describing          the plocess by
                        Descriptlve
                                                                           .in practic       e.     The maln example
          whichr procluction               are determined

          of     such mode} s are z


           2.1 .1       T h e M a n a g e r n e n tC o e f f i c i e n t       Model


                        / 1/      intro     clr.rc by Boran ( 1 963 ) and exten ded by Kumren
                                                 ed

           Ther ( t loo; , this               mocier assumes th at manager behave ef f icientry
                                                                                                               to rec ent
           d.r average,           but suf f er f rom in--con si stency and biases
                                          regression               is    used to    develop decision             rules
           events.          Linear
                                                            and rrork force        decisrons utiriz.ing               inde-
           for    acr,uar production
                                               such as past                sales arrcirogged prociurction'
           r)endtnt variables
This model is         very floclble      in
Lnvento rY , & d w o r k f o r c e ;
                                to a particular            functional       behaviour      of
being not restrlcted
the cost elements involved.

                                              th e p r c c e d u r e i s   the essentiallY
          A s eriou s drawbac k of
                                of    t h e f o r m of    tjr e rule.
subj ective     selection


                                          ( 1966'f
2,1 .2    Trre sequential Model of C€rdon

          Themainideaoft'hlsmodellstopxoceedinsequence
                                                rarge of inventory t
 startlng   f rom a prespec if led acc ep tabre

 andsetaccordlnglytjneline-shiftlevelsofwork-folce.Thus
                                     to     the range of       lnventory       deviatlon        from
 adjust    tJrese according
                                             deviation s occur too f requently,                  tien
 lts   permi ssj.ble range.            rf

                                  inventory       ranges are subject            to adjustrnent-
 the   acceptabre       lever



 2.1 .3    Siriulation wro els
                         d

                                                                out ln      ttrls fierd    using
            F;terrsive work has been carried

                stati   stlc al                    tlc aI apprc ach e s lnc rudlng
                                     an d matjr erna
  dif f erent

 MonteCar}o'sampllng,andcomputerana}ogue.Inthismode}'
                        ( 1966) , th e simuration starts with a
 1n troduc ed by Virgln
                                        exper5,ence of ttre form and
 productlon pran based on tJre past
                                    emproyment rever r ov€xtimet
 then changes are introduced ln
                                                  untir a minirrrun local
 lnventorles,    sub_Contracting and so fc,rth,

 opetatlng cost is achieved.      Otjrer simulatlon models in ttris
                                                    qzo) and by Naylor
                                   t and sisson (t
 regard are de.ieloped by Enshof
B


(tqZf ) using both discrete                        and contlnuous           events slmul-ation.

An important              f eature    of   simulation             1s that    stochastlc      demand

pattern     can be incorporated                     in    t-he model.        This permlts        the

analysis       of     the forecast            error       on strategy        development.



2.2            E
        NORT4ATIV MOELS


           T h e c o m m o nf o c u s       in normative            models is     on what pmduction

planners       should do.             Mode1s of           this     category     are further       classi-

fled    into    classes;


2;2.1      Aqqreqate Plannlnq                     l'lodels


           Th ei r common o bj ec tlve                   i s to    determin e th e op timal

prodtrction          quantity         to prcduce           and work force         level    to use in

aggtegate           for    t}le next       planning          hori zon.      l'{ocie}s J.n this      cla ss

are elthJr           exact or heuristlc.


2.2. 1.1        6xact ,Models :                   Transportation         method fo unulatlon           of

Bowan ( t gSO) / 1/            propo sed the di stribution                   model of      linear

prcgrarnming for              aggregate planning.                    thl s model f ocussed on the

objectlve           of    assigning        units         of productive         capacity'     so that

production           plus      sto rage co sts were minimi sed and sales de'nand

was rnet witi              in the con straints               of    avaiiable     capaclty.       This

model does not account for                          prodrction        charge co st s.        Such as

hiring      and layoff           of    personnel , and tirere is                 not cost penalty

 f or back ordering              or    l - os t    sales.
aw
                                                                                                                          it

                                                                                                                               ,.]




                        The simplex method of                   linear         prcgranming makes it

             posslble      to      include    prod,rction            level .         Change costs       and

             in vento ry     shortage        co sts     in    the model .             Han ssrnan and Hess /2/

             developed       a simplex rnodel using work fo rc e and production                                     rate

             as independent            decision        variables          and in        terms of the components

             of   the costs         model.       AII    cost        functions         axe considered linear.
         :
         I
!
.l
     I


                        One of       the baslc         weakness of             llnear       progranrmi-ng approaches
 I
 I


I
I
I
             and most other            aggregate        planning          technique          is   the assumptlon of
I

I            determlnl      stlc     dernand.       Anoth er          sho rt    coming of         th e lin eat

             prograrnmj,ng model is               the requirement               of    linear      co st f unction s.

             However, tJre posslbility                  of     plee       wi se llnearity           lmproves tJre

             validity.


                         HoIt      llodigliani         and Simon          /3/        gave tfre weII      known

             rnodel in which tiey                minimi se a quadratic                  co st function        and come

             up with       a llnear         decision         rule     that      solves for        optimal     aggregate

             pro duc tion       rate    and wo rk f orc e si ze f or                  aII    tJre periods         ovell

             the planning           horizon.           L.D.R. hasnany advantages.                      First       the

             model     1 s op tiroi zing an d th e two dec i sion                       nrl es onc e derl ved

             are    simple      to apply.          In addi tion              tlr e model is       dynamic and

              representative           of    the multistage              klnd of        system.       But quadratic

             cost    structure         may have severe limitation                          and probably does not

              adequately        represent         the co st         struc ture        of    ally organizatlon.


                         Bergstrom and Snith                   / 4/      extended the capabillties                    of

              the L.l).R.          lrtodel in     two n6rJ directions.                      Becauseof       the
3' . 1 '.' .   '
           '
f
r

rn
I
                                                                                                                               l0

 r
I




 I
 ir
 *                 aggregate nature of            L.D. R. it         is    not po ssible            to solve directly
 lc
 l:
 I
 t                 for    the optfunum prod.,rction rates                  for     indivldual           pxockrcts.           The

                   development and application                  of    the M.D.R. model suggests that                               it

                   ls    now operationally         feasible          to temove tJre requirement                        of    an

                   aggxegate production            dimension in             planning          models.


                              FurtherTnore, given          the avail-ability                  of    revenue curves

                   for    each product      in    each time period                 the M.D.R. model can deter-

                   mlne optlrnal      prcduction,         sa1es, inventory                  a n d w or k - f o r c e     level s

                   so a s to maximi se prof 1t over                  a spec if ied          time horl zorro


                              Larvrenc e and Burbridge                    /5/      presented            a multiple          goal

                   Iin ear programming mociel consldering                          commonly occurl-ng goals of

                   the firm      in coordinating          prcductj-on             and logistic            planning.            The

                   solutlon      technique       fo r thi s model will                 b e a c o m p u t e r j -z e d m u l t i p l e

                   obj ectivq.    analogue of        th e revi sed si.mplex method.


                              C'oodnan /6/         presented          goaJ. prograniming apploach to

                   solve non-Ilnear         aggregate planning                    models.          If    actual        costs
                   (niring     and firing        co st,   overtime              and idletime,            lnventory          and

                   shortage cost)        can not be satisfactorily                         represented quadrati-

                   c al l;' , th en th e so lu tlon       b ecomes more compl ex .                       One app ro ach to

                   hanCle these mote contplex rnociels is                         to   atternpt formulation                  of    an

                   approx j,rnati-ng linear        model to the original                      non-llnear           co st terms
                   and to     apply    some variate        of    the       siml:Iex metl'iod.              This        appro ach

                   offers     the net acivantage of             at Least providing                      an optinral

                   solution      tc   tJre nroieJ used ano is                   based upon tf,e goal prograr:rring.
ll    .1



                                                             propo ses a linear             pmgtarffning
             Tang and Abdulbhan                  /7 /

                                aggregate      prodtrctron         pranning         pnoblem ln        the
fo rmuration              of

                        heavy manufacturing                 lndustry    '        A baslc model 1s
context        of
                                                                       co st of       p ro duc tion    wh lch
f i r st    deverop ed to mln imi se th e to tal
                                                     llnear.          the baslc        model ls       then
is     assumed to be piece-ryise
                                   a llneat     proglamming model to                      seek an optlrnal
transf      erred         lnto

                               a series   of   pranning         periods          witJrln    tlr e planning
solution           f or

ho rl zon .


               Jaa skalain€ss r V              /B/      has propo seci a go al prcgramming

model for               the     sch eduling    of produc tion , employment and lnvento-

                                                              requirement           ovex a f inite          time
 rl es to          satl sf y known demand or
                                                               separate          ard lncomplete       goars,
 hori_Zo..              Thls model sets three

 the       level        of, prcduction,         errrployment and inventorles;


                                                        formulated           a rnulti-objective
                Thornas and HlIl               /9/

 p r o d t r ct i o n     pranning moder as a goar pxogram which capitarlzes
                                        goar-prograrnming ln                incorporating        rnurtipre
 on the         strength           of
                                               into     the anarysis.                Thls paper lncrudes
  economic considerati.ons

           aspectsr             ignored   by cco&nan            /6/     and Jaakelalnen               /B/ '
  the

                                                               has attempted to plovlde                  a
                 Jarnes, P. Ignizio                  /1o/
                                               very n 6^' f ield            of    go al p rogrammlng
  brlef        bcok at th e reratl
                                                            struc tu re '        As such th e gen eral
     rm der e p I e-{5npti ve p rio ri ty
                                                                 is    viewed as a pxactical'
     goal- prcgrarruning model presented
                                          naturar           rerrresentation          of    a wide variety
     rearlstic            and rather

     of many real               world Problems'
T2


      2.2.1 .2     Heuristic Mo el s:
                               d

      (a)        The production parametric planning model by Jones ( tgZS):

                 This model assumes tjre exl stence of two basic decision
                 nrles addressing work force anci pxoduction levels                      respec-

                 tively,       each of which is expressed as a weighted s-trm f
                                                                            o

                 rates     required to meet future            sales drrring the planning
1l
.,1
 I
                 ho ri zoo .
 I
 I

  t

      (b)        A switrh       rule   prcpo sed by Elmaleh and Eiton          ('tgt +) z

                 They specify          three    inventory    leve1 s and three   prc cLrction

                 levels     to be obtained            by various   combination of control

                 parameters over a historical                demand series.and     chooslng

                 th e set f or wh ich          pro dr.rction i s limited   to discrete      level s

                 such as food and chenricalsi




                                                 -O   OO-
Si
                                                                                             l;l



                                         q.H.&P-TEE           ur

                                INTROqJCTION T9           GOAL PROGRATTTTING



                                                           vary according     to the charac-
                      organisational      objectives

                                      philosophy      of management md particular
             teristics,      types,
                                                      t'he organization'     There is   no single
                                conditlons       of
             envlronmental

             univelsalgoalforallotganizations.Intodaytsdynamicbusl-
                                        put great €rnphasis on ocial  xesponsj'bi-
             ness errvlronment firms
                                                public relations and indurstrial
             Iities,   social contributions,

                             relatlons    etc'
             and labour


                        Ifwegranttjratmanagenerrthasmultiplcconf}icting
                                                 dec i sion c riteria  shourd a} so be mul ti -
             ob j ec t1 ve s to ach 1e ve t]r e
                                                  that whsr a deci sion invorves multiple
             dimen sioqar . This impries
                                                                                   multiple
                                                shourd be capabre of handling
             goals the technique used
                                                                      technique has a
             decision criterla'         The linear programming
                                                   invorvlng multipre goalsi
              limlted     varue for problems


                          Theprimarydifficu}tywithlinearprcgrammingisnotits

              lnabllitytoreflectcomplexreality.Ratheritllesinthe
                                                                 which requires cost
                                       the obj ective f unction
              unidimen sj.onarlty of
                                                                            to obtain '
                                         that is of ten armo st impo ssibre
              or prof it info rmation

                                                                       of   the obj ective    f unction
                                            un idimen sionarity
                          To o vercome ur e

               Iequiredinthelinearprogranulingeffortshavebeenmadeto

               convertvariousg'ealsrcost'sor-valuemeasureintoonecriterion




 *
 *
 *
 *
 ft,.

,.*.
il
*
,':,
|                                                                                                        l4


           namely utllltY.

                         Howeverr €Xact rneasurement f utllity
                                                   o                            is not slmple.

           So decislon making tirough               llnear    programrning via a utittty

           function        is only feasible        1n theoretical           sense.


                         Croal pxogramming i s a modif ic atlon and extm sion of
           Ilnear        pDograrnming. The goal programmlng approach ls a tech-

           nlque that         is capable of handling decislon problems that deal
           wlth        a single goal witjr multlple          s u b g o a l s r E s w e I I a s r p r o b l e ms

           with multiple           goals wlth multiple         subgoals.


                         We can soJve these problems using                  llnear   programming

           wlth        multiple    obj ectj.ves.    We may lntroduce           other     obj ectlve

           f unc tion s a s model con stra int s .           But tJr1s model          require s th at

           the optlrnal           solutlon   must sati sfy alI           constraints.       Furtherrnore,

           1t     is    assumed tJrat equal importance              is    attached    to various

           obJectives.             However, such assumption are absurd.                    It   1s quite

           po ssible        that    all   the constraints      of    the problem can not be

           satisfled.


                         Such a problsn       is called      infeasibLe.         Secondly aII

           constraints            Co not have equal importance.                Therefore goal

           programming which rsnoves all                such difflcultles               is used to

            solve        such ProbI€fns.
|:l
     a'


                                                                                           l5     ': t,




           3.1                           CONICEPT
                    THE GOAL PROGRAT'IMING

                                                 rec eiving    much attention     a s a powel-
                      croaI prcgramming ls
                                             multi-objective     decision   maklng probrern.
           ful     toor   for    analysing
                                                                     introduced      by A- charnes
           The concept of           goal prcgranrning was flrst
                                                 to resorve    infeaslble   linear     prcgraurming
           and lt.lt..cooper        as a tool
                                                                      reflned     by Y. rjlrr    and
           probrerns.           Thls technique   has been further
                                                                    t're popurarity     of GP
           s.Mi     Lee and ot^ers.          The maln reason of

           sumstobeassociatedwithtJreawarenessofthemanagernentscience
                                             orientation      towards multl-goal          or
           techniques and very natural
                                             and uses'       The goals set by the
           multi-obj ective formulation
                                                   only at the expense of otier
           management are often achlevable
                                            goals are in commensurabrei-€. they
           goars.     Furt,reqnor€r these
                                                  unit Scare.         Thus there is a need
            cannot be measured on tJre sane
                                                                                      conf lic ting
            for establlshing    a hlerarchy of lmportance among tjrese
                      -                                                    orly after the
                                        goals are considered.
            goars so that row order
                                       goars are satisfied          or have reached the
            higher orders priority
                                                 improvenrent is deslrabre-              Hence
            point beyond which no further
                                           by goar programming lf the managem
             the problem can be solved
                                                                                         th eir
                                         ranklng of the goals in tenms of
             can prCIvide tJre ordinal
                                                    o f t h e m o c i e l. r t i s n o t a l w a y s
             importance and all rerationship
                                                  goal f urry to the extent desired
             po ssible to achieve th e every
                                           or without programmihg r tJ.Ie managel
              by managernent. Thu s with

                 attachesacertalnprioritytptieachieverrrentofaparticular
                                              goal proglarnmint] is ' therefore' lles
                 goal.   The tnre value of
                                                 j-nvorving multiple conflicting    goals'
                 in the sorution of probrerns




*
i

s
x
{
;x
I*'-
1l    EN
 1 I
.:
                                                                                                                                             l{;
      I
      1
      I
      I
      I
      t
      I       acco rdlng                 to tJr e Manager I s priori
      I
                                                                                       ty    struc ture.
      i
              3.2        QBJECTIVE zutCTIOt{ IN GOA! PRCMI4I'IING


                              In goal programming lnstead                                   of    trylng       to maxirnise or
              minlnise                 the objective             criterion            directly            a s in    lin ea r p ro g rarnm-
'i            lng r lt trie s to min imi se th e devi a tion s ariong the go als                                                 wi tJr in
  I
 t
  I           the given                  sets of constraints.                       The obj ective               func tion      i s tJr e
 I
 I
  t
  t          minlmisati.on                   of    these deviations                   b a s e d o n t h e relative              impo rt,arrc e
 I
 I
 t
  i          or priority                    assigred         to them.


             3.3         RANKTNG
                               Arlp_nEIcHfINq_oF_wI.TIpLE
                                                        coALs

                              In order             to achieve           the ordinal                   solutlon      that    i s to
             achieve the goals according                                    to    th eir         importance negative                  or
             posltlve              deviations             about the gcal                 must be rarrked according to
                                   f


             tpre-€niptivet                    pr5-orlty        factors.             rn this           way the row-order                   goals
             are considered only                          after      hiqher-order                  goals are achleved Bs
             desired.                  The pre-entptive              priority            f actors          have the relation ship
             of Pi)))Pi
                    JJ                  +1 which lmplies               that        the multiplicatlon                   of n however
             rarge       it    may be cannot make pj                                 greater            than or equar to p5.
                                                     *t

                          The next                step to be con sidered                         in     t h e g oa l p r o E r a m m i n g
             is   the weighing of                       deviational              variables             at the       sane priority
             'Level.          It         any goal         invo.Ives many deviationa-l- variables                                 and we
             want to give priority                           to one over               the other.               This can be
             achi-eved by assigning                          different            weights             to these deviationaL
             variables                 a t t h e s a n r ep r i o r i t y        - l - e v e L . A t t h e s a r n ep r l o r i t y        l-evel
I7    1 '




t h e s u b g o a l w t r i c h a c q u i r e s m a x i m u md i f f e r e n t i a l   weight wiII   be
satisfied         flrst       and then it           qo to next.             The criterla     for
determining           t|.re different           weights of deviatlonal                  variable   could
be the minimization of opportunity                               cost.        Therefor€r devlational
varlables         o n t h e s a m ep r l o r i t y       level      must be commensurable,
aldrough deviation s that                     are on tfre dif f erent prlorlty                level s
need not be commensurable.




                                                -OOO-
tfr

                                                9.U.AP_IEE-                    IV-


                 GOAL PROGMI4MING A MATHEMATICAL
                                AS             TOOLUSED


        4.1                       MODEL
              GENERALI4ATHEh4ATICAI.


                 The goal prograrnming was originally                                       proposed by Charnes

        and Cooper f or a lln ear model which has been f urther                                       developed
        by many others.               A preferred             solutlon         is one which minimises the

        deviations   from the set goals.                             Thus a simple llnear             goal
        progranr.ning probl em f ormulation                          i s sfrolvn belovr z

                                                          k
                                                                          (o'-   +          *)
                 lvlin imi z e                          :           Pj'               d.
                                                                                       ]'
                                                        j=1
                                             n
                 Subj ec t to                :                                                   b. for   1 = 1....ID.
                                                                                                  1
                                            j=1

                                       *J,or*,            dr-V        o       foralliandj

                                            +
                 wh ere                d.        x d.-
                                        11


                          x.                     Decision           variable     to be found
                            J
                          k                      Nurnberof prioriti              es

                          n                      N u r n b e ro f    decision        variables

                          m                      Number of           goal s
                           l^                   Goal set by the decision maker
                                 ]-
                          DJ
                          . .                    The pre-anptive              weights such that

                                                 P >>> nj +r
                                                  r'



    !
    I
t
?
G
*
I


E
)l



fi
f;
#
fr
                                                                                                                               i l




                                                                                                                        ll)


                In addition           to   setting        goals for           the obj ectives,                  the
 decisicn        maker must also                be able to give               an ordj,nal              ranking        to
 the obj ectives.              The ranking            can aJso be f oundout by paired

 comparison method which prcvides                            some check on tJre consistency
 in     the value judgenrent of                  the decision            maker.           In g^ris method the
 decision        maker is       asked to compare the goars taken two at a
                                                                          time
and indicate           which goal           is    the more important                    in the paj-r.                This
procedure is              applied      to al.r combinations                  of     goar pairs.                This
analysis         results       in     a complete ordinaL                 ranking          o f , . _t h e g o a l s 1 n
t errns o f      th eir     impo r tanc e .


                The go al prog rannmin util
                                     g                      i ses th e simplex method of
so Jving       Iin ear prog ramming plcoble'rn. Horr.'ever several modif      r                     ic ation s
a r e r e q u i r e d a n c i i s o f t e n r e f e r r e d a s fr n o d i f i e d s i m p l e x
                                                                                                 method| .


4.2      SIF.PS OF TILE SIUPLE(-UFTHOD OF GOAL PROGRAIIMII.JG


Step -      1

                set   up th e ini tial           table      f rrrm goa-r programming f ormuratj.on.

We assume that             the initia]           solution         is    at origin.                  Therefore, alr
the negative           deviationaf          var:-abLes in              tf,re modeL constrain t must
enter the solution                  base initially           prepare          a table             a s s f r o w nb e l o w .
Firr     up this       table        i.e.   all    arj     and bi values.                   The cj         corumn will
contain       ttr€ coefficient             of    deviational"           variabJe because these
varjables        onJ.y enter tl-re solution                  fj.rst.          In il^re (rj                a:) matrix
l-ist    tl,e priority         .Ievel in         l j r e v a r l a b L e c o J u m n f r o m . L o l v e s ta t t h e

top of     the hicyhest at tfre bottom.                        C a l - c u r L a t et f r e , j      values and
2f,l



reco rd     i t    in to       RFISco lumn .



cj

                  Variable                 R .H . S .         d;..       .         oi"'             xj..a


                                             bi                   cij



Z.     cj               P5
 J
                        P4


                        P..,
                          J




                        P2

                        P1



Step-2l.                Determin e th e Nerv D:lterlnq                        Varl_ab]g


            Find th e high est priority                        Jevel, that            has no t been attain ed

completely             b y e x a m i n i n gJ Z ,
                                           J         values in           the R.li.5.          column.        After

dete rrnj-n in g t j r i s        fi-nd out         the   highest            Z.
                                                                              JJ
                                                                                     Ci     entry    column.      The

variable          of     t h i s c o l u r n n w i 1 1 e nt e r      t h e s ol u t i o n     b as e i n    th e nex t

 i tera tion .


             In    c a se or       ti e,    c l ' :e c k t h e n e x t       prio ri ty      level     and sef ect

 tt^,e coluntr         that     has the       greater         value.
F
    l.-

                                                                                                                           ?l


                                                                               yariable            from the Solution       Base
          ltep-3:                 Determine tne leavin

                        D i v i d e t h e R . H .S . v a l u e s b y t h e c o e f f l c i e n t s               in the keY

          column.          This will             g i v e t h e n q i l F [ . H .S . v a l u e s .           Select the q)r,

          w h i c h h a s t h e m i n i m u mn o n - n e g a t i v e v a l u e . The variable in that
                                                                                      column ln the
          row wlll be replaced by the varj,able ln the key
                                            If     tjrere exists a tie,                     find       the row that has the
          next iteration.
          variable         with the higher priority                             factor.            In tnis way tlre higher

          order goals will                  be attained first                    and thereby reduces the nunber

          of iteration s.

           Step          4 2      D ete rmin e th e Nsr                    Solu tion
           -

                                    f ind the net, R.H.S. values and coef f icient                                   of the key
                         First
                                           old      values by the pivot                      elsnent        i. e. the element
           row by dividing

           at the        infersec        tion      of     the key row anci key column.                           Then f ind the

           ne$, varues for               alr      otjrer      rov"s by using                calculation.


           (oro varue                ( intersectional                 eI snen t of           that       row X Nerrvvalue in      the

                                  the     same column)).                    Norv compLete the table                by flnding        tj
           key row in

           and ,j            Cj    values for             the PrioritY                rolvs'



                                    Determin e wh etn er So]ution                           i s        tirnal   or Not ?
           Step-5:


                          Analyse t1re goal attainment                               fevel        of   each goal by cttecking

                                                                             rovJ'     If    th e Z:        value s are al-I zero
            th e Z:       v a l uJ se f vo r e- a- c h p r i o r i t y .
                                      - -    Y - -     |
                                                                                                        J
                    J

                    is      a optimal            solution'      tjrere are positi ve (2.
                                                                       Therr if                                                tj)
            this                                                                             J
                                                                                           (2,
            valu e s in         th e rov,r d€termin e wh eth er th ere ale n e g a t i v e
                                         ,                                                   J
                                                                                                                               tj)




,t
i
2',)



             'a
values at          higher priority                      l . e v e l i n t t r e s d m ec o l u m n .         If    there
is negative (zj              a: ) value at a higher priority                                     revel for the
positive     (z:       a-:) value in the row of interest                                        then the solution
is opt5-maI. Finally                   if      there exists a positive                          (Z;        C*) value
                                                                                                   J         J'
at a certain        priority                level       and there           is    no negative            (Z;        C* )
                                                                                                             JJ
va lu e at   a h igh er priority                       Jevel' in        th e sarne co rumn , tJrJ.s is                  no t
an optimal        solution.                 H e n ce r e t u r n       to   step          2 and continue.


4.3     COI/IR'TER B45ED SOLUTION OF GOAL 88etr8At4tu1ING


          rn order         for     g o a r p r o g r a m m i n g t o b e a u s e f u l mdnagernen
                                                                                                t
science techni-que for                  decision            analysis,             a c o m l - r u t e rb a s e d s o l u t i o n
1s an essential         requiremento


          After     suitabre            m od i f i c a t i o n     s the computer based solution
proc edure of       goal progranrming presented                                  by Lee can be u sed to
sorve     problems-          The prccess of finding                              computer sorution                  conslsts
of    data input,     calcul-ating                     the resul-ts and printing                       out     the results.

DATA INP9T            First            of     all      the fol,Iorving             data is        to be fed to
the computer through                   the key board


          PROB                    NROWS                            IWAR                       NPRT

          Th en input       i s th e di rec tlon                   of       unc ertain ty

                       B         for          B ot h    direc tion s

                       L     for              Less      than

                       E     for              Exactly        equal

                      G      f or            Grea ter        tfr srr
f'                                                                                                              2:l


          then tJre gbjective                 function        ln   input    is   given   in    the followlng

          manner.


          devi atlon                          row in whlch                        p rio rity                 wei ght
          -ve/'l've                           dev. occurs




                        Then the d a t a a b o u t t e c h n o l o g i c a l      coefficient         of    the

          choice        variable        is        entered    lik e



          Row ln wh ic h                              Colurnn ln which                                Value of
              appeared                                      apPeared                                   tiJ
          "tj                                         "tj




                        Then the rlght               hand side value of           aI]    the eqns. are

           e nt e r e d .


           4.4       AI{ALYSI S OF THE COMRJIER OUTRJT


                            Computer solution               of goal programming pllovides the

           following           outPut        '-


                            Computer print           out of input          data (tne     right      hand slcie,

                                             rates,     and tjre objective          function)         and final
           the substitution
                             solution        tabl-e ( inc luding       tj        Cj matrix       a nd e v a l u a t i o n
           simplex
                                   f unction) , slack anallrsis,                  varlable       analysis         and
           of obj ective

           the anal.ysis of              the objective.




 I
 j

 I

 1
 I




+2
.t


 !
24

             TliE I-rvL SIMPLEXSOLUTION

             (a)     The Riqht Hand side


                           Thls    shows the right          hand side varues of the variabre
            (d evi a tion a 1 a n d d e c i s i o n
                                                     T h e n u m b e r s o n . t h e r e f t h a nd s l d e
                                                    ).
       I


       i
            are vari able numbers for the basic
a l
  i
't     I
                                                                 varlabres.          The real values
 i
            on th e righ t h a n d s i d e r e p r e s e n t c o n s t a n t s
   I
   I
                                                                               of the basi,c variabres.
       I



            ( n)     rh e (rj_jt             Matrix

                       This       shows the        (Z:      cj ) *" trix      o f th e la st i, tera tion .

            (c )


                       This       evar.uation simpry represents                    the tj     values    of   goals.
           rn othur-*ords,               the values present          the r"'der attalned               portion     of
           goal g.


           (d)      The Slr:ck Anal-vsis


                                  RL}{              AVAILABL E                     POS- SLK             N EG-g.K

                      It    presents         the   values    of   the      right    hand    side   and aJ so value
           of     ttre negative          anci po s i ti ve vari able s fo r          each equation.


           ( u)     Variabl_e Ana]ysls


                              VARIABLL                        /t'ioLilJT
2{t



        It     presents   the constants of only         the basic choic e

varl abl es.


(f)   Analvsls     of   the Obiective


        It     presents   the t j   values for    the goals.    These values

represent      the under attained      portion    of   goaI5.



                 PRIORITY                        UNDERrcHIEVEIJIENT
|*
                                                                                                                        2$


                                                       9.U-AP_ ER
                                                             T                         V-

                                           FORMTULATIONOF                   T H E PROBL
                                                                                      E4


            5.1      GENERAL

1 l1
 '
'{                     ABC Company produces                   the motors of                 several   kinds which
  I
  I
  I
  I
  I         differ       fr''om each other             in    severaL aspects like                  frame size,        horse
  I
  'l
  :l
  t
  I
  I
            povJerr R.P.lvlo, nurnber of poles                        etc.        It     forecasted        the demandof

            total      horse power, to                 be produced for              the year 19BB-89.            Manage-
            m e nt e s t i m a t e d    a cumulative            grovrth of             15% in    the demand of horse
            povrer.        The demand e.f horse power wds dif f erent for                                   every period
            (four      months).           Hence an atternpt is made to meet tjre demand for

            every perioci in an optimal                       way con sidering                production      rat€,
            inventory.,         back ordering,              overtime          etc.          This also had the demand
            record of  every type of motor (:-n numbers) for the year l gBB-89
                                                 -
            gi ven in Appendix ( table 1). ttith th e knowledge of the Last year

            r e c o r c i , t h e d e r n a n df o r   every kind of motor j-s assessed quarterly

            for     the complete year' 19BB-89 (nppendix Table 2).                                         An attempt    is
            also made to meet rvith the ffuctuations                                     in   demandfor       every kind
            of motor in           an optimal           way.       For each f ranre size,               there were
            f urt-|er     many klnds of motors with                         dif f eren t        specif ications.

            Therefore,          only      tt:e representative                 member of          each frarre size was

            consicereci.            The types of motor vrere still                            too many to make tne
            problern as a wnole very large                          to be deal-t with.                Hence th ose type

            of motor v;hich dici not                   s f r o wm u c h v a r i a t i o n s     in their    machini.g
j,tl
            I                                                                                                                                                        27
            I




                  times were cJubed together                                          r€drcnably.                   It    was realised                  that
                  this     problenr can be solved by making aggregate planning
                                                                               mode.1
                 w h i c h c o n c e nt r a t e s               on determining                          rrrhich combination                  of        th e
                  decision               variable             should be utilized                             in order            to optimally
                  adjust          t h e d e r n a n df l u c t u a t i o n s                   within            tfre constraints                 if        doy.


                             M a n a g e m e r r to f              the company also                          desired          to incorporate
                 other       re-l'evant aspects such as possibly                                                    stable        employment for
                  the workers'                  m a n a g e m e n tp o l i c i e s                  or     goals relative                  to inventory
                  a nd w o r k e r s a t i s f a c t l o n                   a nd p e r f o r m a n c e .                T he s e a r e a l s o
                  incorporated                  in the problsn                          formuLation.                     The overall              cost
                 func tion           wa s segregated                         in to maj o r components i . e. pro duc tion                                            rate
                 cost      and irr ventory                      co sts          so that             m a n a g e m e n c r l t - rl - . a v e a c t d i t i o n a l
                                                                                                                    t
                 flexibil          it;'      in penali zLng deviation s from the various                                                          types of
                 co st s.


                            The mocie] optinizes                                  the aggregate production                                variable
                 ds well           as detennining                         the opt,irnal procuction                             rate.          The cornplete
                 probfsn           1s formulated                       in      the form of                  goal.s anci is              uren sol-ved by
                 u s i n g c o r n p r u t e rb a s e d s o l u t i o n                     tecl:nique of                g oa f p r o g r a m m i n g
                                                                                                                                                                  /12/ .
                 The followirrg                   goals are incorporated                                    in     the problcrn 1n order or
                 priori      ty      l

                 ( a)       S a Je s r e a J i s a t : . o r r
                 ( b)       To lir::iL the cost associated                                              witit     production             rate          to     a
                            sp ec .i f i c,ci srirc L.
                                                  rlh
                 (c)        T o I i ; : l t t t l r e c o st ? s s o c i a t e d                        !''rrtir irrven tory           _l-evels Lo a
                            sFiec f ierJ ar!rorjn
                                i               t.
                 ( d)       '[c
                                    p . r r o m o t e . i , c . r - ' ] l e r S f r o ' Lv a t i o n
                                                                               r          j              tf rrc;t,rghLaiX)r for.ce                     stal,j.J.1ty.




      l



      {
      I



      i
,]a
      ;
2B

   5 .2             (
            PRT.ORITYI 

   SALES REALISATII}.I


              E q n . ( t ) rep re sen t s a gen eraL rel. a tion
                                                                  sh ip .

                                     rt-r         +Pt       = st +rt
                                                                                                              ....     (r)
  where                 rt-t             =          rnventory       at the end of          t-r   tf, period

                        rt               =          lnventory       at   the    errd of    t t,'l period

                        Pt               =         pqr duc tion      rate      during     t th period

                       st                =         Sales in t        tn period.

 Let               (t
                         . L)/                     Inventory        during      t   th period

                   ( r. )                          Srortage        during      t th period

 The + and          sign above the parantJreses mean that
                 ^-                                       the quantities
 inside       the parantheses can have onJ_y * or
                                                     ve values respec tively.

            B y u s i n g tran sfo rrnat ion ..

Let                     +            =
                   a                         lal        a 77 O

                                     =        0      otherwise

                   a                         la l       a

                                              O     othenvise
                    +                    =a
Tlt en             aa

T he r e f o r e         .t+
                         *t                  1t             1t                                                       (:)
and                     'Tt+
                           -                 It-r
                                 1                          It-r                                                     (:)
2lf


          For convenience,                       Iet u s put

                       tr*              =            oa*            rt-             Dt-

          and          -t
                       rl -1            =            oJ-t           rLr             oa-t

          E q ns .   (2)     a nd ( g ) c a n b e r e w r i t t e n            ds


                       oa* -                Dt- = rt                                              . ...    (q)

                       oi-l -               ot-l = rt-r                                           .... (s)

         F r o m e q n s . ( 1) ,           (4)       and (S)


                       Pt = st+(oJ-o.)-(oJ_,                                               DLr)   ....     (6)




                      T-=T=
                      -r.!
                           L-tI
                                            l-
                                                 o
                                                            (oJ-,         D+
                                                                               1)          Zeto            (z)
         Frorn (6)         and (z)                   p1    = (q* Di)            +s1                       (B)


                                                           e
                      Pz=               Iz + 52                It

         From (+)       ancJ       (s)

                      Pz                                                                            . .   ( g)

         Frorn (B)     and        ( e)
                      Fz+         Fr
                                  Y1
                                    I
                                                     (oJ- q) +(s, +sr)                                    ( 1c )




   ,
   ..1




.;,i*.
,".il.
 E
*
  ,3
;i0



               pg = 13 *S3               12

  Fmm ( q) and (s)

               Pg = (oa*- D;) *s3                              (D; -     D;)
                                                                                                  ""     (tt 1
  From (t o) and (il 1

               P,    + P ^ + p-^
                               3       = (oa+ D ; ) + s g + s z
                                            *
                I        z                                      *s1                              . ... (lz1
  Thus for      each type of motor there                               are tJrree eqnso
                                                                                        8,   1 0 and
  12 for     tJrree planning           perlods                 respectively.

 For F;<arnple z

 Type A motor

              PR't    = D R t+
                             +          Dnt                =    sRt                             aaoa    (t:1
             PAt + Paz            t;      ' uA2
                                         J- r'
                                                                   set + sez                    aaaa    ( 14)

             PRt + Fez + Prc                                    n-
                                                                 rLJ           sRt +sRz +sag    o...   (t:1

Type B motor

             Pgt -     ofi r ou'          = su't
                                                                                                       (te1
                                                                                               ....
             Pt't +    Psz 'i,          +ou,                   = s g t + sez
                                                                                               ....    (1?)

             P n t + P,3z + Pa:               ui           + D,r:           Sst +sirz +seg       ..o   (ts1

T y pe C m o t o r

            Pct       ,-+
                      trl        ua.,          sn1
                                                    z l                                       ....    (1a)
3t     1--)




                Pct n Pc2             ot, + D^^       vz
                                                               =    sct + scz                         .... (zo1
                Pct * Pc2 * Pca                      tJ. * Dfs                  sct + scz * sca ....            .2l1

 Type D motor

                o?'      ojt + fo1 = sot                                                             . . .. (zz7
                Pot * Pp              oJ, + Db                             * so2                     o.. o (zs;

               not + P m +            'pD 3          oi                    spt + s P +       sog     . ... Q+1
 Type E motor

               PEt       tJt          {r               sgt                                           . ... (zs;
                                        +
               PEt       P-^          Dez + D a                     set * sE2                        ,,... (2a1
               P-.    +P-^       +P,-^               ^+
                                                     'E3   + DE: = set * sE2 * sE3
                Et        cz            tr,J                                                         ....     Ql7

               Simiiar      t:,pe of           e q ns . c a n b e w r i t t e n       for   F, G, H, I & J
t y p e o f m o t o r s a n d w e r e gi ven th e ecn s. number f rom (ZA
                                                                          to                                42) .

5.3      pRrontry( rr r

TO LJIII_Irr{E cosr             (r'      ASSOCIATED
                                                  WITH PRODUCTION
                                                                RATE

            Pit x ci           * cTot + Dot                    'Jt =           PRct                 .... (+s1
wh ere     a             Standard              variable           cost          p ro cfuc
                1                                                         of            ing on e
                         unit      of       product        I

                         The cost              per    overtime           hour
           "l
           .             h l a n a g e m e ' n tI s t a r g e t     Je.veJ for        prochrction
                RCt                                                                                 rate     costs.
J]?

                     DJt' DZt              Deviation al           vari ables

                     Pit                   Prodrction           rate      for    ith   type of motor
                                           during     t    th period            (Oecision         variable)
                  ot                       Overtime hours in period                      t

                  In       the piesent         problen,         idl e time vva n o t a 1 l o w e d .
                                                                              s
 The cost      for     producing one unit                 of    every type of motor is                     given
 in Appendix (tante                5).


                 The eqn. (+e; for                  three planning periods                   can be
written       as follow5           ,

For t = 1

                 11€2 Pat                3553 Pet              662C Pct          l OZl q pOt        . 12675 PEt

                 16533 Pr                2443t Oo1 3 0 e 11 P H r                4 6 80 0 p l t
                          r                                                                           7 A2cO p-,
                                                                                                                t
                Bot + DZr                _+     =
                                         '61         24266000                                       ,,...    (qq)

For t-    )

                1 4 8 2 P , e . + 3 5 5 3 P e z + 6 6 2 0 Pcz + 1021
                                                                    4 Poz + 12675 PE2 +

                16 5 3 3 P r z + 2 4 4 3 1 P o r + 3 O g 1 PH2* 46800
                                                         1            PtZ + 20200 plZ +

                uoz *D62                 DOZ -       24266C00                                       ....     (45)

For t - 3

                14€2 p^^ + 3553 Ps:                  + 662C Pcg
                      l{J                                                       1O21 Po:
                                                                                    4              12675 Pe:
                1 6 5 3 3 P - - + 24431 p*          + 30C)1 P,,^
                                                          1
                             rJ                                     tlJ
                                                                            468 CCrpl:             7 0 2C 0 F ; :
               BC^ + D.-                 ,Ja = 2.1266
                                                    c)oc
                 <    |-<   V J
                                                                                                   . ... (+o1
:i3


      5,4        PRIORITY (III1


      to ttrr:,tt rne cost (Rs.1asgoctRteowttlt
      IIWENTORYLEVEL To SPECIFIED.4{vlCx.JNT


                  Inventory            costs     are anotJrer important                       component of     total
      aggregate planning                      costs       and for       finished         goods include        carrying
t-
      costs,          and back order costs.
1
.1!
4
#
'i
      In general               form    2


                 t.i D i t     +
                                     + c i -0 D i t ) +
                                     , ^1     n-
                                                        %t                              rct                          o...    (+ty
                           q
      w he r e        ti               cost     incurred         for        carrying     one unit        of product

                      cl 0 1
                                       cost     incurred         for        one unit     of product i,         back-
                                       ordered per period

                      oi; -            Fini shed goods in ventory                    of product i          in period         t

                      Di. =            B a ck o r d e r    q u a nt i t y     of   product      i   in   perio d t

                      Dit       anci                  Devia tion aI
                                       "i.                                    variables.

                                         1n''
      T h e v a l , u e s o f C ? a n d Ci    f o r e very                  t)'p e of    moto r are gi ven in
                               1
      a p pe nd i x        ( tante     4) .


                 The final             equations          are   as gi ven beLow 2

      For t = 1                 1 E ; 2 . 4 D ; J + 4 1i . 2 ( o J ' ) + 8 1 4 . 6 ( D J l) + 1257 (D;
                                          (
                                                                                                       )
                 1360          toi )    + 573.9 (oi)               +3006.6 (D;)                + 3804.4     (oJ') +
                 57c0          cni I    + E 6 4 c ( o _ i .) + z 2 B ( o o . ,) + 5 1 4 ( n o . ,) + 1 0 1 8 ( o J . ,
                                                           ,
                                                                                                                  )
A
          {t
 [f                                                                                                            ;i4
  I
     T
     r
     I



     il
     it
  :t
  t
  l
  rJ                    1521 (Der) +1e50 (Dur) +717 (or')                             +3?58 (0E.,) +
  t  ,l


  ,1
 'i
  rt

  i                     4755 ( o[, )     + 72oo(oI' ) + 1 0 8 0 0 ( o J , ) +                    qt
 I                                                                            {r
                            22,00000.                                                                 ...,. (4s)
                                182.4 to[)        + 4 1 1 . 2t o j r l       + 8 1 4 . 8 t o & l + 1257(oJr) +

                        1 5 6 0( o L ) + 5 7 3 . e ( + )        + 3 0 0 6 . 8 ( D J r ) + 3 8 0 4 . 4( D ; )    +
                       5?60 (oi)        + 8640 (D;)            + 2zB (o_)            + 514 (D;2)    + 1o 1 B ( o f r +
                                                                                                                     )
,ll
                        1571 (oor) + 1e50(DE2) + 717 (oir)                           + 3?58 (%)       + 47s5(orr)+
 :J
 i
fr
,I



,f;
                       7 2 C O( o r , ) + 1 CrB (fr)
                                              00               +   n
                                                                                +
                                                                                          22, 00000.
.rl
:;l
                                                                   z          "lz
 :f



                                                                                                      o...     (49)


                            . 1 8 2 . 4( o i . ) + 4 1 1 . 2( o i )          + 814.8 toit      + 1 2 5 7t o $ l       +

                       1560 toil            573.e t
                                                      {. I + 3 0 0 6 . 8 ( o & ) + 3 8 0 4 . 4 (o,i.
                                        +                                                                       +
                                                                                                   )
                       5?60toi I        +   8640 (o_i.) + 228 (orc) + 514 (o-r.) + 10 1 8 ( o f . ) +

                       157r (of.)       + 1q5o (oo.) + 717 ({.)                      + 3758 (n[. ) + 4755(o[. +
                                                                                                             )
                       72oo (oi.)       + 10 B 0 o ( o J . )                              22, 00000.

                                                                                                      .. .. (so1
               In our case we treat          (Orta) and (oJa) as if                  they were cho ic e
               varj.ables   say (Ura) and (Vra)            respectiveJ_y.

                       Therefore      the   above eqns,         for      t   _ j
                                                                                 , 2 and 3 can      be
               expres sed as belorv t
Pankaj Chandna MTech Dissertation
Pankaj Chandna MTech Dissertation
Pankaj Chandna MTech Dissertation
Pankaj Chandna MTech Dissertation
Pankaj Chandna MTech Dissertation
Pankaj Chandna MTech Dissertation
Pankaj Chandna MTech Dissertation
Pankaj Chandna MTech Dissertation
Pankaj Chandna MTech Dissertation
Pankaj Chandna MTech Dissertation
Pankaj Chandna MTech Dissertation
Pankaj Chandna MTech Dissertation
Pankaj Chandna MTech Dissertation
Pankaj Chandna MTech Dissertation
Pankaj Chandna MTech Dissertation
Pankaj Chandna MTech Dissertation
Pankaj Chandna MTech Dissertation
Pankaj Chandna MTech Dissertation
Pankaj Chandna MTech Dissertation
Pankaj Chandna MTech Dissertation
Pankaj Chandna MTech Dissertation
Pankaj Chandna MTech Dissertation
Pankaj Chandna MTech Dissertation
Pankaj Chandna MTech Dissertation
Pankaj Chandna MTech Dissertation
Pankaj Chandna MTech Dissertation
Pankaj Chandna MTech Dissertation
Pankaj Chandna MTech Dissertation
Pankaj Chandna MTech Dissertation

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Pankaj Chandna MTech Dissertation

  • 1. lr - a PRODUCTION PLANNING PROBLEMS IN ENGINEERING INDUSTRY (A GOAL APPROACH) PROGRAMT'||}|G A EDISSEFT1nAITI'ON SUBMI.TTED IN PARTIAL FULFILMBNT OF THE REQUIREMENTSFOR THE AWARD OF THE DEGREE OF fflagter o[ 6,e*lnologP in ,ff[erhantuI g S,ngineerin BY A PAilKAfCHAtlDlf ttzltt U nder the gui danco of Prof. S.K.SHARMA rtment o[ Sler[anital @ngineerfng @epa Begional@ngtneertng 6otlege - &uruh*tletra 132ttg
  • 2. t? CERT _rJ J-.C-A-T-E- that the dissertation entitred' rt is certified ' },ROIICTION PLPJ{I.II}.G IN INruSTRY PITOBLE]IS ENGII'IEERING t by A G.AL pRocRAl/$rNGAppRoAcH i. s being submitted partial fuif ilment of M'Tech' Panka.i char:cina 7B2f Bg, i.n , of Kunrkshetra in l{echanic a} Brgin eering Degree course o f h i s e w T lw o r k c a r r i e d u n i v e r s i t y , K u r u ks he t r a i s a r e c o r d out bY h:-m under mY guidanc e' ernbo ed in di tJr i. s di s sertation ha s no t been Th e matter previou sl y f or t[ e award of any otir er degree' sutrnltted Plac e Ktrruk shetra Dated g'3'11 Gitrre''Y ( s. K. 9tarma ) Assistant Profes$cr-t Itechanical Engg. DeparLnerrt' Regional thgin eeri19 ColIe-Q€, f.unrk shetra-132 1 1 9. --1-
  • 3. _l_.c_F_N_o-,$rJL G E M E N T S ED I have great pleasure in xecording my profound gratitude SharTna,Assistant Prof essor, Mechanical Rrgin eering to prnf . s.K. CoIlege, Kurukshetra' for his Departrnent, Regional Engineering lnvaluab}eguidanC€lconstantencouragernentandimmensehelpgiven r a o k , w hi c h r e v e a r s h l s r at each and every stage of persuing this of Production Planning. His inclslve vast knowledge in the fierd discussions and valuable suggestions arways comments, fruitful edif ied me vrith j est to carryout my work f irmly' am very thankful to Prof . B.s. Gillr chairmanl Departrnent I of Mechanicar Engineering, Regionar Engineering college t facilities to carryout this work. Kurukshetra for providing t h a n k s a r e d u e to Er . L.M. Sain i r Er. Rai e sh Jan 9ra" becial f o r th eir kind heJ'P during mY Er. R . S . B h a t i a a n d E l . D . K ' Jain computer lab. work. In addition ' I am highly thankful to aII my friends who helped e s p e ci a l l Y to Arvind ' Rajender, Vinod and Rajiv out mY dissertation work. me a lot in carrying PIace : Kunrkshetra Dated z 8 Z t2tl i) t n,ffcHAI{D}JA 7 8 2 /B e -1r-
  • 4. tv rr I _C_.OJIIJ_E-N-T-S- Paqe 1 CERT ICATE IF 11 ACKNC'T{L EDGEMENTS 111 COI'ITENTS Y LIST OF NOTATIONS vl1 ABSTRrcT CHAPTER I INTROUJCTION 1 1.1 AGGREGATEPRODUCTIONPLN{NING 2 ( cEt'tERAL Fonlvt) 1;2 SMPLEST STRTJCTURE AGGREC'ATE oF PLAI.INING PROBLF{ 1.3 MULTI STAGE AGGREGATEPLANINING SYSTEM CHAPTER I1 LIT ERATUREREVI ET{ 6 2.1 DESCRIPTIVE MODELS 6 2.1.1 Th e Management Coefficient lvlodel 6 2.1 .2 The Sequential ModeJ, of Gordon 7 2.1 .3 Simulation Models 7 I{ODEL NORT1ATIVE S I '2.2;1 Aggregate Pfanning Models E 2.2. 1:1 Exact lvtodels I 2 .2 .1 .2 H zu ri stlc Mocie.Is L2 -1i i-
  • 5. 'r tj TO GOAL PRG RAtvlMI'NG INT RODLJCTION CHAPTES_:--III COI{CEPT L5 3.1 THE GOAL PROGRAI{MING GOAL 3.2 OBJECTIVE zuNCTlON IN t6 PRGRAI/tlvtING OF MULTIPLE 3.3 RAI'IKING Al'lD WEIC+{ING !6 CSALS cHAPTE_&_:--IV CoALPR0GMJ{I4INGAsAMATI{EIVIATICAL 18 TOOL USED 18 MODEL 4.1 GBERAL MATTIEMATICAL 4.2 STEPSoFTHESIMPLEXMETHoDoFG0AL t9 PROGRAMIVIING OF @AL CCI!1zuTERBASED SOLUTION 22 PRGRA[[MII'IG 2t 4.4 AI{ALYSIS OF THE COIPUTER0'JTPUT - CHAPTER v FOII},ATJLATION PROBLE}/' OF 26 5.1 GEI'IERAL 2E 5.2 PRroRrrY ( r) ( rr) 1t 5.3 PRToRTTY 'J 5.4 P r l r O R t ' t Yr r r ) ( 58 PRToRITY rv ) ( 5.5 39 5.6 CChISTRATNTS 59 5.6-1 Productive hours constralnt q1 5 .6.2 6vertime C o ns t r a i n t ) DI SCUSSION Of-- RESULT @ 8 APPEIDIX b2 ES REFERET.JC -trOO-
  • 6. LI ST OI. NOTA I ONS b. GoaI set bY decision maker. 1 The cost for overtime hour. ci Standard variable co st of pro'dttcing one unit of product i. c? C os t i n c u m e d for cauying one unit of product i. ,-10 Cost incurred for one unit of product ibackordered "i per peri-od. + Dit Finished goods inventory of pnrduct i in period t; Dit Backorder quantity of product i in period t. + Dzt ,- Nunber of workers in excess of the desired maximum. Dit Number of workexs less than the desired maximum. + Dot'D6t Deviational variabJes. + Dzt'Dzt Deviation aI variable s. rt In ven to ry at th e en d of t th Period. Tt + t In ven to ry during t th Peri o d. ^t T- Shortage during t Ur Peri-od. rt-1 - Inventory at the end of (t-t)Ul perioci. k Numl:erof priori ties.
  • 7. Nurnber of goals. M Number of decision varlables' n Overtime hours in Period t' ot produc tion rat6 f or ith type of motor during Pit tth period (aecision variable)' for Pj The ple-emPtlve weiqht i' Ievel for pnoduction rate co sts' Pnct Managenren target t Pt Productionrateduringttl:Iperiod' M a x i m u r nd e s i r e d c h a n g e i n w or k f o r c e } e v e l ' Qt st Sales in t tjr Period' for one unit of motir i' Ti Hours required Efficiency coeff icient for old work€rso T1 Efficlency coefflcient for n e u rw o r k e l s . T2 Efficiency coefficient during ovel time hours' T3 during t th peri-od. vlt size of work force ( t-t ) trt period. vtt- t size o f w or k f o r c e d u r i n g D e ci s i o n v a r i a b l e t o be found' xj xt ChangeinthenumberofworkersinperiodIt'. -O(rO- - v1-
  • 8. t; _A_B_S T R A C T In this dissertation an attempt has been made to anaryse the aggregate production pranning of ABc ( tne actual, nane has been disguised) optimally. T h e d e n r a n do f the nrotors with diff erent specificaticns vrere not constant ciuring the pranning horizon of one year i.e. lgg8-89, conslsting of three planning perlods. To meet the fluctu- ation in d e r n a n da g g r e g a t e p l a n n i n g model wBs formulated, wttich conc en trates on determi-nin g which cornblnation of t'1.re clecision varjables like production rate, inventory, back- ordering, o vertime etc. should be utilised in order t,o optirnally adj ust th e dernand f Luctuations within the con straints if "ny-. The aggregate planning model was formulated in the form of goals with different priorities. The problem was tii en soL.ied by usinc{ 'Computerized technique of S.[':, Lee to soir'e the goal proqraruning problemst. Tne decision variabLes l't'ereobtalned for arr the planrring periods. -OoO- -vi-- $ -i.i"tt , r.,$ s $
  • 9. ffi' 1? CHAPTER - - - F I INTRODUCTION - to plan and con trol operatlon s at llo st managers want level thmugh some klnd of agglegate plannlng tJre broadest of lndividuar products and detaired that by passes detalrs sch edr.rrlng of f ac irlties and personn el. Managernent wourd deal wlur baslc relevant decisions of programmlng the use of resources. This is accomplished by revlevrlng pnoiected ancl by settlng activlty rates that can be emplolm€rrt ievels wlth ln a glven ernproyment rever by varylng hours worked- varied decisions have been made for the firce these baslc upcomlng period, detailed schedulinE can ploceed at a lowel the broad pran. Finalry ra st Iever wittr ln the con strain ts of activlty levels need to be made with the minute changes ln realisation of thelr possible effects on the cost of changing production level and on inventory co sts if th ey are a part of th e sy st,em.
  • 10. I ! .l @ 2 i 1.1 AC€ EC"ATEPROI'qIION PLAI{NING GENERAL FORM The aggregate prodtrctlon plannlng pmblem tn lts most general form can be stated as follows z A set of forecasts of denrandfor each period 1s glven - (a) The size of work force' Tlt ( b) The rate of Production ' Pt (c) The quantitY striPPed' St The resultlng |n ventory per monti can be determln ed as follows - rt It_t +Pt- St. The Problsn is usually tesolved analytically by mininizing th e exp ec ted total cost ovel a given plannlng horizon conslsting of some o r all of tfr e f o lloning co st component s. g .,}.j :$ ,.$ (a) The cost of regular pay-roIl anci over-time- rrfi s (r ) Th e co st of ch anglng tJr e p ro duc tion rate f rom $ * one period to tJre next. inventotY. .,ry (c ) The cost of carrYing #r IP (o) Co st of, sho rtag e s re su I tlng f rom no t meeti.ng fr ,# :l$ ri, th e dernanci. # i,! ".! I 'i :i Th e soluiion to tli e p robl sn i s simpl if ied lf a verage ir d e r n a n co v e r i the planrring horizon is expected t,o be constant.
  • 11. 3 So th e cornplexity ln tfr e aggregate pro chrc tion plannlng ppoblem arlses frrrm the fact that ln most sltrrations demand per period i s not constant but are subj ected to substantlal f 1uctuatiop s. The question arises as to how tfrese f luctuations should be absorbed. Assuming tjr at th ere ar€ no pr,oblem ln recelvlng a constant supply of raw material and labour at a f lx ed vjage rate , th e problen may be seen by considering ttr ese pure alternatlves of responding to such fluctuations. (a) A increase in orders is met by hiring and a decrease ln orders is accompllshed by lay-offs. (b) Mai6tenance of constant work force, adjustlng production rate to orders by wo rking o vertinre or undertime acco rdingly . (c ) Maintenance of a c o n s t a n t v l o r k f o r c e a nd c o n s t a n t t'ro duc tion rate, dllor^ring inventorie s and order bac klog s to fluctuate. ( d) Mainten anc e of con stan t wo rk f orc e and meet th e f luc tu- a tion in dern ci th ro ugh p I ann ed b ac k log s o r* by subcon t- an ra ting d. exc e s s dernan In gmera] none of t.|re above alternatives will prove best but some cornbination of then can cio. Order f.luctuations showed in g eneral be ab so rbed partly by in vento ry , partly by o vertirre and partly by hiring and layof f s anci the optimum ernphasis on the se f actcrs wiII d e p e n c lu p o n t h e c o s t s i n a n y p a r t i c u l a r f acto ly.
  • 12. . l 4 I t 1.2 STRUCTURE SIIV1PLEST OFjTSGREGATEPLAIININ9 PROBL4I The structure of the aggregate planning problem ls represented by the single stage sy stqn 1; e; the plannlng horlzon ls only one perlod ahead. The stage of the system at the end of period ls def in ed by Ho, Po and Io , the aggre- gate work f orce si zer prcduction ox activity rate and inven- tory level respectively. The ending state conditions become ' the initj.al condition s for the upcoming period. Wehave a forecast of the requirements for the upcoming period through s o m ep r c c e s s . The decision mademay call for hiring or laylng of f personnel, tJrus expanding or contracting the ef f ectlve capacity of tJre pro duction systern. The work force size together wi th th e ciec slon on ac tivlty i rate during th e perlod th en deter- min es th e *requi red amount of o vertiffi€ r in ventory level s or back orderlng whether or not a shift must be addedor deleted and other posslble changes ln operatlng pmcedure. 1 .3 .PLAI.ININGSYSTEMS MULTISTAGE AGGREGATE In this type of planning system, our obj ectlve ls to make the declsions concerning the work force slze and production rate f or the upcoming periods. In doing so, howeverr w€ conslder the sequence of projected decisions in relation to forecasts and their cost effects. The decislon for the upcorning period is to be affected by the future period forecasts and the decision
  • 13. 5 I t j r e s e q u e n c eo f process must consider the cost effects of decisrons. The connecting rlnks between the severar stages at the end of one p.eriod are the lrfr P and I Values tJrat are and the beglnning of the next. The feedback roop frorn tjre proc edure to obtain decision process may invorve some lterative be a sotutloD. The sequential nature of tjre decislons should or wxong onry in terms kept in mind. Arr decisions are right a period of time' o f t h e s e q u e n c eo f d e c i s i o n s o v e r -OO0- j I I I a1 It t I
  • 14. .l t; g_u.a8.tgE.- Ir LITERATURE REVIEN - t-^- , The pro duc tion planning problenr i s conc erned with the optimal quantlties to be prcduced in order spec if ying a sp ec if ied planning hori zon. Many model s t to meet denand for ll 'l pros and cons, have been deveroped to each of which has its help to solve thls Ploblem' in the llterature differ ln These rnodels introduced and methodorogy. Howevert their orientatiorl r scope, contents we can classify these models ln two maln catagorles ciescrjPtlve and normative' ' 2.1 pEqpRrPTrVE MODELS models aim of describing the plocess by Descriptlve .in practic e. The maln example whichr procluction are determined of such mode} s are z 2.1 .1 T h e M a n a g e r n e n tC o e f f i c i e n t Model / 1/ intro clr.rc by Boran ( 1 963 ) and exten ded by Kumren ed Ther ( t loo; , this mocier assumes th at manager behave ef f icientry to rec ent d.r average, but suf f er f rom in--con si stency and biases regression is used to develop decision rules events. Linear and rrork force decisrons utiriz.ing inde- for acr,uar production such as past sales arrcirogged prociurction' r)endtnt variables
  • 15. This model is very floclble in Lnvento rY , & d w o r k f o r c e ; to a particular functional behaviour of being not restrlcted the cost elements involved. th e p r c c e d u r e i s the essentiallY A s eriou s drawbac k of of t h e f o r m of tjr e rule. subj ective selection ( 1966'f 2,1 .2 Trre sequential Model of C€rdon Themainideaoft'hlsmodellstopxoceedinsequence rarge of inventory t startlng f rom a prespec if led acc ep tabre andsetaccordlnglytjneline-shiftlevelsofwork-folce.Thus to the range of lnventory deviatlon from adjust tJrese according deviation s occur too f requently, tien lts permi ssj.ble range. rf inventory ranges are subject to adjustrnent- the acceptabre lever 2.1 .3 Siriulation wro els d out ln ttrls fierd using F;terrsive work has been carried stati stlc al tlc aI apprc ach e s lnc rudlng an d matjr erna dif f erent MonteCar}o'sampllng,andcomputerana}ogue.Inthismode}' ( 1966) , th e simuration starts with a 1n troduc ed by Virgln exper5,ence of ttre form and productlon pran based on tJre past emproyment rever r ov€xtimet then changes are introduced ln untir a minirrrun local lnventorles, sub_Contracting and so fc,rth, opetatlng cost is achieved. Otjrer simulatlon models in ttris qzo) and by Naylor t and sisson (t regard are de.ieloped by Enshof
  • 16. B (tqZf ) using both discrete and contlnuous events slmul-ation. An important f eature of simulation 1s that stochastlc demand pattern can be incorporated in t-he model. This permlts the analysis of the forecast error on strategy development. 2.2 E NORT4ATIV MOELS T h e c o m m o nf o c u s in normative models is on what pmduction planners should do. Mode1s of this category are further classi- fled into classes; 2;2.1 Aqqreqate Plannlnq l'lodels Th ei r common o bj ec tlve i s to determin e th e op timal prodtrction quantity to prcduce and work force level to use in aggtegate for t}le next planning hori zon. l'{ocie}s J.n this cla ss are elthJr exact or heuristlc. 2.2. 1.1 6xact ,Models : Transportation method fo unulatlon of Bowan ( t gSO) / 1/ propo sed the di stribution model of linear prcgrarnming for aggregate planning. thl s model f ocussed on the objectlve of assigning units of productive capacity' so that production plus sto rage co sts were minimi sed and sales de'nand was rnet witi in the con straints of avaiiable capaclty. This model does not account for prodrction charge co st s. Such as hiring and layoff of personnel , and tirere is not cost penalty f or back ordering or l - os t sales.
  • 17. aw it ,.] The simplex method of linear prcgranming makes it posslble to include prod,rction level . Change costs and in vento ry shortage co sts in the model . Han ssrnan and Hess /2/ developed a simplex rnodel using work fo rc e and production rate as independent decision variables and in terms of the components of the costs model. AII cost functions axe considered linear. : I ! .l I One of the baslc weakness of llnear progranrmi-ng approaches I I I I I and most other aggregate planning technique is the assumptlon of I I determlnl stlc dernand. Anoth er sho rt coming of th e lin eat prograrnmj,ng model is the requirement of linear co st f unction s. However, tJre posslbility of plee wi se llnearity lmproves tJre validity. HoIt llodigliani and Simon /3/ gave tfre weII known rnodel in which tiey minimi se a quadratic co st function and come up with a llnear decision rule that solves for optimal aggregate pro duc tion rate and wo rk f orc e si ze f or aII tJre periods ovell the planning horizon. L.D.R. hasnany advantages. First the model 1 s op tiroi zing an d th e two dec i sion nrl es onc e derl ved are simple to apply. In addi tion tlr e model is dynamic and representative of the multistage klnd of system. But quadratic cost structure may have severe limitation and probably does not adequately represent the co st struc ture of ally organizatlon. Bergstrom and Snith / 4/ extended the capabillties of the L.l).R. lrtodel in two n6rJ directions. Becauseof the
  • 18. 3' . 1 '.' . ' ' f r rn I l0 r I I ir * aggregate nature of L.D. R. it is not po ssible to solve directly lc l: I t for the optfunum prod.,rction rates for indivldual pxockrcts. The development and application of the M.D.R. model suggests that it ls now operationally feasible to temove tJre requirement of an aggxegate production dimension in planning models. FurtherTnore, given the avail-ability of revenue curves for each product in each time period the M.D.R. model can deter- mlne optlrnal prcduction, sa1es, inventory a n d w or k - f o r c e level s so a s to maximi se prof 1t over a spec if ied time horl zorro Larvrenc e and Burbridge /5/ presented a multiple goal Iin ear programming mociel consldering commonly occurl-ng goals of the firm in coordinating prcductj-on and logistic planning. The solutlon technique fo r thi s model will b e a c o m p u t e r j -z e d m u l t i p l e obj ectivq. analogue of th e revi sed si.mplex method. C'oodnan /6/ presented goaJ. prograniming apploach to solve non-Ilnear aggregate planning models. If actual costs (niring and firing co st, overtime and idletime, lnventory and shortage cost) can not be satisfactorily represented quadrati- c al l;' , th en th e so lu tlon b ecomes more compl ex . One app ro ach to hanCle these mote contplex rnociels is to atternpt formulation of an approx j,rnati-ng linear model to the original non-llnear co st terms and to apply some variate of the siml:Iex metl'iod. This appro ach offers the net acivantage of at Least providing an optinral solution tc tJre nroieJ used ano is based upon tf,e goal prograr:rring.
  • 19. ll .1 propo ses a linear pmgtarffning Tang and Abdulbhan /7 / aggregate prodtrctron pranning pnoblem ln the fo rmuration of heavy manufacturing lndustry ' A baslc model 1s context of co st of p ro duc tion wh lch f i r st deverop ed to mln imi se th e to tal llnear. the baslc model ls then is assumed to be piece-ryise a llneat proglamming model to seek an optlrnal transf erred lnto a series of pranning periods witJrln tlr e planning solution f or ho rl zon . Jaa skalain€ss r V /B/ has propo seci a go al prcgramming model for the sch eduling of produc tion , employment and lnvento- requirement ovex a f inite time rl es to satl sf y known demand or separate ard lncomplete goars, hori_Zo.. Thls model sets three the level of, prcduction, errrployment and inventorles; formulated a rnulti-objective Thornas and HlIl /9/ p r o d t r ct i o n pranning moder as a goar pxogram which capitarlzes goar-prograrnming ln incorporating rnurtipre on the strength of into the anarysis. Thls paper lncrudes economic considerati.ons aspectsr ignored by cco&nan /6/ and Jaakelalnen /B/ ' the has attempted to plovlde a Jarnes, P. Ignizio /1o/ very n 6^' f ield of go al p rogrammlng brlef bcok at th e reratl struc tu re ' As such th e gen eral rm der e p I e-{5npti ve p rio ri ty is viewed as a pxactical' goal- prcgrarruning model presented naturar rerrresentation of a wide variety rearlstic and rather of many real world Problems'
  • 20. T2 2.2.1 .2 Heuristic Mo el s: d (a) The production parametric planning model by Jones ( tgZS): This model assumes tjre exl stence of two basic decision nrles addressing work force anci pxoduction levels respec- tively, each of which is expressed as a weighted s-trm f o rates required to meet future sales drrring the planning 1l .,1 I ho ri zoo . I I t (b) A switrh rule prcpo sed by Elmaleh and Eiton ('tgt +) z They specify three inventory leve1 s and three prc cLrction levels to be obtained by various combination of control parameters over a historical demand series.and chooslng th e set f or wh ich pro dr.rction i s limited to discrete level s such as food and chenricalsi -O OO-
  • 21. Si l;l q.H.&P-TEE ur INTROqJCTION T9 GOAL PROGRATTTTING vary according to the charac- organisational objectives philosophy of management md particular teristics, types, t'he organization' There is no single conditlons of envlronmental univelsalgoalforallotganizations.Intodaytsdynamicbusl- put great €rnphasis on ocial xesponsj'bi- ness errvlronment firms public relations and indurstrial Iities, social contributions, relatlons etc' and labour Ifwegranttjratmanagenerrthasmultiplcconf}icting dec i sion c riteria shourd a} so be mul ti - ob j ec t1 ve s to ach 1e ve t]r e that whsr a deci sion invorves multiple dimen sioqar . This impries multiple shourd be capabre of handling goals the technique used technique has a decision criterla' The linear programming invorvlng multipre goalsi limlted varue for problems Theprimarydifficu}tywithlinearprcgrammingisnotits lnabllitytoreflectcomplexreality.Ratheritllesinthe which requires cost the obj ective f unction unidimen sj.onarlty of to obtain ' that is of ten armo st impo ssibre or prof it info rmation of the obj ective f unction un idimen sionarity To o vercome ur e Iequiredinthelinearprogranulingeffortshavebeenmadeto convertvariousg'ealsrcost'sor-valuemeasureintoonecriterion * * * * ft,. ,.*. il *
  • 22. ,':, | l4 namely utllltY. Howeverr €Xact rneasurement f utllity o is not slmple. So decislon making tirough llnear programrning via a utittty function is only feasible 1n theoretical sense. Croal pxogramming i s a modif ic atlon and extm sion of Ilnear pDograrnming. The goal programmlng approach ls a tech- nlque that is capable of handling decislon problems that deal wlth a single goal witjr multlple s u b g o a l s r E s w e I I a s r p r o b l e ms with multiple goals wlth multiple subgoals. We can soJve these problems using llnear programming wlth multiple obj ectj.ves. We may lntroduce other obj ectlve f unc tion s a s model con stra int s . But tJr1s model require s th at the optlrnal solutlon must sati sfy alI constraints. Furtherrnore, 1t is assumed tJrat equal importance is attached to various obJectives. However, such assumption are absurd. It 1s quite po ssible that all the constraints of the problem can not be satisfled. Such a problsn is called infeasibLe. Secondly aII constraints Co not have equal importance. Therefore goal programming which rsnoves all such difflcultles is used to solve such ProbI€fns.
  • 23. |:l a' l5 ': t, 3.1 CONICEPT THE GOAL PROGRAT'IMING rec eiving much attention a s a powel- croaI prcgramming ls multi-objective decision maklng probrern. ful toor for analysing introduced by A- charnes The concept of goal prcgranrning was flrst to resorve infeaslble linear prcgraurming and lt.lt..cooper as a tool reflned by Y. rjlrr and probrerns. Thls technique has been further t're popurarity of GP s.Mi Lee and ot^ers. The maln reason of sumstobeassociatedwithtJreawarenessofthemanagernentscience orientation towards multl-goal or techniques and very natural and uses' The goals set by the multi-obj ective formulation only at the expense of otier management are often achlevable goals are in commensurabrei-€. they goars. Furt,reqnor€r these unit Scare. Thus there is a need cannot be measured on tJre sane conf lic ting for establlshing a hlerarchy of lmportance among tjrese - orly after the goals are considered. goars so that row order goars are satisfied or have reached the higher orders priority improvenrent is deslrabre- Hence point beyond which no further by goar programming lf the managem the problem can be solved th eir ranklng of the goals in tenms of can prCIvide tJre ordinal o f t h e m o c i e l. r t i s n o t a l w a y s importance and all rerationship goal f urry to the extent desired po ssible to achieve th e every or without programmihg r tJ.Ie managel by managernent. Thu s with attachesacertalnprioritytptieachieverrrentofaparticular goal proglarnmint] is ' therefore' lles goal. The tnre value of j-nvorving multiple conflicting goals' in the sorution of probrerns * i s x { ;x
  • 24. I*'- 1l EN 1 I .: l{; I 1 I I I t I acco rdlng to tJr e Manager I s priori I ty struc ture. i 3.2 QBJECTIVE zutCTIOt{ IN GOA! PRCMI4I'IING In goal programming lnstead of trylng to maxirnise or minlnise the objective criterion directly a s in lin ea r p ro g rarnm- 'i lng r lt trie s to min imi se th e devi a tion s ariong the go als wi tJr in I t I the given sets of constraints. The obj ective func tion i s tJr e I I t t minlmisati.on of these deviations b a s e d o n t h e relative impo rt,arrc e I I t i or priority assigred to them. 3.3 RANKTNG Arlp_nEIcHfINq_oF_wI.TIpLE coALs In order to achieve the ordinal solutlon that i s to achieve the goals according to th eir importance negative or posltlve deviations about the gcal must be rarrked according to f tpre-€niptivet pr5-orlty factors. rn this way the row-order goals are considered only after hiqher-order goals are achleved Bs desired. The pre-entptive priority f actors have the relation ship of Pi)))Pi JJ +1 which lmplies that the multiplicatlon of n however rarge it may be cannot make pj greater than or equar to p5. *t The next step to be con sidered in t h e g oa l p r o E r a m m i n g is the weighing of deviational variables at the sane priority 'Level. It any goal invo.Ives many deviationa-l- variables and we want to give priority to one over the other. This can be achi-eved by assigning different weights to these deviationaL variables a t t h e s a n r ep r i o r i t y - l - e v e L . A t t h e s a r n ep r l o r i t y l-evel
  • 25. I7 1 ' t h e s u b g o a l w t r i c h a c q u i r e s m a x i m u md i f f e r e n t i a l weight wiII be satisfied flrst and then it qo to next. The criterla for determining t|.re different weights of deviatlonal variable could be the minimization of opportunity cost. Therefor€r devlational varlables o n t h e s a m ep r l o r i t y level must be commensurable, aldrough deviation s that are on tfre dif f erent prlorlty level s need not be commensurable. -OOO-
  • 26. tfr 9.U.AP_IEE- IV- GOAL PROGMI4MING A MATHEMATICAL AS TOOLUSED 4.1 MODEL GENERALI4ATHEh4ATICAI. The goal prograrnming was originally proposed by Charnes and Cooper f or a lln ear model which has been f urther developed by many others. A preferred solutlon is one which minimises the deviations from the set goals. Thus a simple llnear goal progranr.ning probl em f ormulation i s sfrolvn belovr z k (o'- + *) lvlin imi z e : Pj' d. ]' j=1 n Subj ec t to : b. for 1 = 1....ID. 1 j=1 *J,or*, dr-V o foralliandj + wh ere d. x d.- 11 x. Decision variable to be found J k Nurnberof prioriti es n N u r n b e ro f decision variables m Number of goal s l^ Goal set by the decision maker ]- DJ . . The pre-anptive weights such that P >>> nj +r r' ! I t ? G * I E )l fi f; #
  • 27. fr i l ll) In addition to setting goals for the obj ectives, the decisicn maker must also be able to give an ordj,nal ranking to the obj ectives. The ranking can aJso be f oundout by paired comparison method which prcvides some check on tJre consistency in the value judgenrent of the decision maker. In g^ris method the decision maker is asked to compare the goars taken two at a time and indicate which goal is the more important in the paj-r. This procedure is applied to al.r combinations of goar pairs. This analysis results in a complete ordinaL ranking o f , . _t h e g o a l s 1 n t errns o f th eir impo r tanc e . The go al prog rannmin util g i ses th e simplex method of so Jving Iin ear prog ramming plcoble'rn. Horr.'ever several modif r ic ation s a r e r e q u i r e d a n c i i s o f t e n r e f e r r e d a s fr n o d i f i e d s i m p l e x method| . 4.2 SIF.PS OF TILE SIUPLE(-UFTHOD OF GOAL PROGRAIIMII.JG Step - 1 set up th e ini tial table f rrrm goa-r programming f ormuratj.on. We assume that the initia] solution is at origin. Therefore, alr the negative deviationaf var:-abLes in tf,re modeL constrain t must enter the solution base initially prepare a table a s s f r o w nb e l o w . Firr up this table i.e. all arj and bi values. The cj corumn will contain ttr€ coefficient of deviational" variabJe because these varjables onJ.y enter tl-re solution fj.rst. In il^re (rj a:) matrix l-ist tl,e priority .Ievel in l j r e v a r l a b L e c o J u m n f r o m . L o l v e s ta t t h e top of the hicyhest at tfre bottom. C a l - c u r L a t et f r e , j values and
  • 28. 2f,l reco rd i t in to RFISco lumn . cj Variable R .H . S . d;.. . oi"' xj..a bi cij Z. cj P5 J P4 P.., J P2 P1 Step-2l. Determin e th e Nerv D:lterlnq Varl_ab]g Find th e high est priority Jevel, that has no t been attain ed completely b y e x a m i n i n gJ Z , J values in the R.li.5. column. After dete rrnj-n in g t j r i s fi-nd out the highest Z. JJ Ci entry column. The variable of t h i s c o l u r n n w i 1 1 e nt e r t h e s ol u t i o n b as e i n th e nex t i tera tion . In c a se or ti e, c l ' :e c k t h e n e x t prio ri ty level and sef ect tt^,e coluntr that has the greater value.
  • 29. F l.- ?l yariable from the Solution Base ltep-3: Determine tne leavin D i v i d e t h e R . H .S . v a l u e s b y t h e c o e f f l c i e n t s in the keY column. This will g i v e t h e n q i l F [ . H .S . v a l u e s . Select the q)r, w h i c h h a s t h e m i n i m u mn o n - n e g a t i v e v a l u e . The variable in that column ln the row wlll be replaced by the varj,able ln the key If tjrere exists a tie, find the row that has the next iteration. variable with the higher priority factor. In tnis way tlre higher order goals will be attained first and thereby reduces the nunber of iteration s. Step 4 2 D ete rmin e th e Nsr Solu tion - f ind the net, R.H.S. values and coef f icient of the key First old values by the pivot elsnent i. e. the element row by dividing at the infersec tion of the key row anci key column. Then f ind the ne$, varues for alr otjrer rov"s by using calculation. (oro varue ( intersectional eI snen t of that row X Nerrvvalue in the the same column)). Norv compLete the table by flnding tj key row in and ,j Cj values for the PrioritY rolvs' Determin e wh etn er So]ution i s tirnal or Not ? Step-5: Analyse t1re goal attainment fevel of each goal by cttecking rovJ' If th e Z: value s are al-I zero th e Z: v a l uJ se f vo r e- a- c h p r i o r i t y . - - Y - - | J J is a optimal solution' tjrere are positi ve (2. Therr if tj) this J (2, valu e s in th e rov,r d€termin e wh eth er th ere ale n e g a t i v e , J tj) ,t i
  • 30. 2',) 'a values at higher priority l . e v e l i n t t r e s d m ec o l u m n . If there is negative (zj a: ) value at a higher priority revel for the positive (z: a-:) value in the row of interest then the solution is opt5-maI. Finally if there exists a positive (Z; C*) value J J' at a certain priority level and there is no negative (Z; C* ) JJ va lu e at a h igh er priority Jevel' in th e sarne co rumn , tJrJ.s is no t an optimal solution. H e n ce r e t u r n to step 2 and continue. 4.3 COI/IR'TER B45ED SOLUTION OF GOAL 88etr8At4tu1ING rn order for g o a r p r o g r a m m i n g t o b e a u s e f u l mdnagernen t science techni-que for decision analysis, a c o m l - r u t e rb a s e d s o l u t i o n 1s an essential requiremento After suitabre m od i f i c a t i o n s the computer based solution proc edure of goal progranrming presented by Lee can be u sed to sorve problems- The prccess of finding computer sorution conslsts of data input, calcul-ating the resul-ts and printing out the results. DATA INP9T First of all the fol,Iorving data is to be fed to the computer through the key board PROB NROWS IWAR NPRT Th en input i s th e di rec tlon of unc ertain ty B for B ot h direc tion s L for Less than E for Exactly equal G f or Grea ter tfr srr
  • 31. f' 2:l then tJre gbjective function ln input is given in the followlng manner. devi atlon row in whlch p rio rity wei ght -ve/'l've dev. occurs Then the d a t a a b o u t t e c h n o l o g i c a l coefficient of the choice variable is entered lik e Row ln wh ic h Colurnn ln which Value of appeared apPeared tiJ "tj "tj Then the rlght hand side value of aI] the eqns. are e nt e r e d . 4.4 AI{ALYSI S OF THE COMRJIER OUTRJT Computer solution of goal programming pllovides the following outPut '- Computer print out of input data (tne right hand slcie, rates, and tjre objective function) and final the substitution solution tabl-e ( inc luding tj Cj matrix a nd e v a l u a t i o n simplex f unction) , slack anallrsis, varlable analysis and of obj ective the anal.ysis of the objective. I j I 1 I +2 .t !
  • 32. 24 TliE I-rvL SIMPLEXSOLUTION (a) The Riqht Hand side Thls shows the right hand side varues of the variabre (d evi a tion a 1 a n d d e c i s i o n T h e n u m b e r s o n . t h e r e f t h a nd s l d e ). I i are vari able numbers for the basic a l i 't I varlabres. The real values i on th e righ t h a n d s i d e r e p r e s e n t c o n s t a n t s I I of the basi,c variabres. I ( n) rh e (rj_jt Matrix This shows the (Z: cj ) *" trix o f th e la st i, tera tion . (c ) This evar.uation simpry represents the tj values of goals. rn othur-*ords, the values present the r"'der attalned portion of goal g. (d) The Slr:ck Anal-vsis RL}{ AVAILABL E POS- SLK N EG-g.K It presents the values of the right hand side and aJ so value of ttre negative anci po s i ti ve vari able s fo r each equation. ( u) Variabl_e Ana]ysls VARIABLL /t'ioLilJT
  • 33. 2{t It presents the constants of only the basic choic e varl abl es. (f) Analvsls of the Obiective It presents the t j values for the goals. These values represent the under attained portion of goaI5. PRIORITY UNDERrcHIEVEIJIENT
  • 34. |* 2$ 9.U-AP_ ER T V- FORMTULATIONOF T H E PROBL E4 5.1 GENERAL 1 l1 ' '{ ABC Company produces the motors of several kinds which I I I I I differ fr''om each other in severaL aspects like frame size, horse I 'l :l t I I povJerr R.P.lvlo, nurnber of poles etc. It forecasted the demandof total horse power, to be produced for the year 19BB-89. Manage- m e nt e s t i m a t e d a cumulative grovrth of 15% in the demand of horse povrer. The demand e.f horse power wds dif f erent for every period (four months). Hence an atternpt is made to meet tjre demand for every perioci in an optimal way con sidering production rat€, inventory., back ordering, overtime etc. This also had the demand record of every type of motor (:-n numbers) for the year l gBB-89 - gi ven in Appendix ( table 1). ttith th e knowledge of the Last year r e c o r c i , t h e d e r n a n df o r every kind of motor j-s assessed quarterly for the complete year' 19BB-89 (nppendix Table 2). An attempt is also made to meet rvith the ffuctuations in demandfor every kind of motor in an optimal way. For each f ranre size, there were f urt-|er many klnds of motors with dif f eren t specif ications. Therefore, only tt:e representative member of each frarre size was consicereci. The types of motor vrere still too many to make tne problern as a wnole very large to be deal-t with. Hence th ose type of motor v;hich dici not s f r o wm u c h v a r i a t i o n s in their machini.g
  • 35. j,tl I 27 I times were cJubed together r€drcnably. It was realised that this problenr can be solved by making aggregate planning mode.1 w h i c h c o n c e nt r a t e s on determining rrrhich combination of th e decision variable should be utilized in order to optimally adjust t h e d e r n a n df l u c t u a t i o n s within tfre constraints if doy. M a n a g e m e r r to f the company also desired to incorporate other re-l'evant aspects such as possibly stable employment for the workers' m a n a g e m e n tp o l i c i e s or goals relative to inventory a nd w o r k e r s a t i s f a c t l o n a nd p e r f o r m a n c e . T he s e a r e a l s o incorporated in the problsn formuLation. The overall cost func tion wa s segregated in to maj o r components i . e. pro duc tion rate cost and irr ventory co sts so that m a n a g e m e n c r l t - rl - . a v e a c t d i t i o n a l t flexibil it;' in penali zLng deviation s from the various types of co st s. The mocie] optinizes the aggregate production variable ds well as detennining the opt,irnal procuction rate. The cornplete probfsn 1s formulated in the form of goal.s anci is uren sol-ved by u s i n g c o r n p r u t e rb a s e d s o l u t i o n tecl:nique of g oa f p r o g r a m m i n g /12/ . The followirrg goals are incorporated in the problcrn 1n order or priori ty l ( a) S a Je s r e a J i s a t : . o r r ( b) To lir::iL the cost associated witit production rate to a sp ec .i f i c,ci srirc L. rlh (c) T o I i ; : l t t t l r e c o st ? s s o c i a t e d !''rrtir irrven tory _l-evels Lo a sFiec f ierJ ar!rorjn i t. ( d) '[c p . r r o m o t e . i , c . r - ' ] l e r S f r o ' Lv a t i o n r j tf rrc;t,rghLaiX)r for.ce stal,j.J.1ty. l { I i ,]a ;
  • 36. 2B 5 .2 ( PRT.ORITYI SALES REALISATII}.I E q n . ( t ) rep re sen t s a gen eraL rel. a tion sh ip . rt-r +Pt = st +rt .... (r) where rt-t = rnventory at the end of t-r tf, period rt = lnventory at the errd of t t,'l period Pt = pqr duc tion rate during t th period st = Sales in t tn period. Let (t . L)/ Inventory during t th period ( r. ) Srortage during t th period The + and sign above the parantJreses mean that ^- the quantities inside the parantheses can have onJ_y * or ve values respec tively. B y u s i n g tran sfo rrnat ion .. Let + = a lal a 77 O = 0 otherwise a la l a O othenvise + =a Tlt en aa T he r e f o r e .t+ *t 1t 1t (:) and 'Tt+ - It-r 1 It-r (:)
  • 37. 2lf For convenience, Iet u s put tr* = oa* rt- Dt- and -t rl -1 = oJ-t rLr oa-t E q ns . (2) a nd ( g ) c a n b e r e w r i t t e n ds oa* - Dt- = rt . ... (q) oi-l - ot-l = rt-r .... (s) F r o m e q n s . ( 1) , (4) and (S) Pt = st+(oJ-o.)-(oJ_, DLr) .... (6) T-=T= -r.! L-tI l- o (oJ-, D+ 1) Zeto (z) Frorn (6) and (z) p1 = (q* Di) +s1 (B) e Pz= Iz + 52 It From (+) ancJ (s) Pz . . ( g) Frorn (B) and ( e) Fz+ Fr Y1 I (oJ- q) +(s, +sr) ( 1c ) , ..1 .;,i*. ,".il. E * ,3
  • 38. ;i0 pg = 13 *S3 12 Fmm ( q) and (s) Pg = (oa*- D;) *s3 (D; - D;) "" (tt 1 From (t o) and (il 1 P, + P ^ + p-^ 3 = (oa+ D ; ) + s g + s z * I z *s1 . ... (lz1 Thus for each type of motor there are tJrree eqnso 8, 1 0 and 12 for tJrree planning perlods respectively. For F;<arnple z Type A motor PR't = D R t+ + Dnt = sRt aaoa (t:1 PAt + Paz t; ' uA2 J- r' set + sez aaaa ( 14) PRt + Fez + Prc n- rLJ sRt +sRz +sag o... (t:1 Type B motor Pgt - ofi r ou' = su't (te1 .... Pt't + Psz 'i, +ou, = s g t + sez .... (1?) P n t + P,3z + Pa: ui + D,r: Sst +sirz +seg ..o (ts1 T y pe C m o t o r Pct ,-+ trl ua., sn1 z l .... (1a)
  • 39. 3t 1--) Pct n Pc2 ot, + D^^ vz = sct + scz .... (zo1 Pct * Pc2 * Pca tJ. * Dfs sct + scz * sca .... .2l1 Type D motor o?' ojt + fo1 = sot . . .. (zz7 Pot * Pp oJ, + Db * so2 o.. o (zs; not + P m + 'pD 3 oi spt + s P + sog . ... Q+1 Type E motor PEt tJt {r sgt . ... (zs; + PEt P-^ Dez + D a set * sE2 ,,... (2a1 P-. +P-^ +P,-^ ^+ 'E3 + DE: = set * sE2 * sE3 Et cz tr,J .... Ql7 Simiiar t:,pe of e q ns . c a n b e w r i t t e n for F, G, H, I & J t y p e o f m o t o r s a n d w e r e gi ven th e ecn s. number f rom (ZA to 42) . 5.3 pRrontry( rr r TO LJIII_Irr{E cosr (r' ASSOCIATED WITH PRODUCTION RATE Pit x ci * cTot + Dot 'Jt = PRct .... (+s1 wh ere a Standard variable cost p ro cfuc 1 of ing on e unit of product I The cost per overtime hour "l . h l a n a g e m e ' n tI s t a r g e t Je.veJ for prochrction RCt rate costs.
  • 40. J]? DJt' DZt Deviation al vari ables Pit Prodrction rate for ith type of motor during t th period (Oecision variable) ot Overtime hours in period t In the piesent problen, idl e time vva n o t a 1 l o w e d . s The cost for producing one unit of every type of motor is given in Appendix (tante 5). The eqn. (+e; for three planning periods can be written as follow5 , For t = 1 11€2 Pat 3553 Pet 662C Pct l OZl q pOt . 12675 PEt 16533 Pr 2443t Oo1 3 0 e 11 P H r 4 6 80 0 p l t r 7 A2cO p-, t Bot + DZr _+ = '61 24266000 ,,... (qq) For t- ) 1 4 8 2 P , e . + 3 5 5 3 P e z + 6 6 2 0 Pcz + 1021 4 Poz + 12675 PE2 + 16 5 3 3 P r z + 2 4 4 3 1 P o r + 3 O g 1 PH2* 46800 1 PtZ + 20200 plZ + uoz *D62 DOZ - 24266C00 .... (45) For t - 3 14€2 p^^ + 3553 Ps: + 662C Pcg l{J 1O21 Po: 4 12675 Pe: 1 6 5 3 3 P - - + 24431 p* + 30C)1 P,,^ 1 rJ tlJ 468 CCrpl: 7 0 2C 0 F ; : BC^ + D.- ,Ja = 2.1266 c)oc < |-< V J . ... (+o1
  • 41. :i3 5,4 PRIORITY (III1 to ttrr:,tt rne cost (Rs.1asgoctRteowttlt IIWENTORYLEVEL To SPECIFIED.4{vlCx.JNT Inventory costs are anotJrer important component of total aggregate planning costs and for finished goods include carrying t- costs, and back order costs. 1 .1! 4 # 'i In general form 2 t.i D i t + + c i -0 D i t ) + , ^1 n- %t rct o... (+ty q w he r e ti cost incurred for carrying one unit of product cl 0 1 cost incurred for one unit of product i, back- ordered per period oi; - Fini shed goods in ventory of product i in period t Di. = B a ck o r d e r q u a nt i t y of product i in perio d t Dit anci Devia tion aI "i. variables. 1n'' T h e v a l , u e s o f C ? a n d Ci f o r e very t)'p e of moto r are gi ven in 1 a p pe nd i x ( tante 4) . The final equations are as gi ven beLow 2 For t = 1 1 E ; 2 . 4 D ; J + 4 1i . 2 ( o J ' ) + 8 1 4 . 6 ( D J l) + 1257 (D; ( ) 1360 toi ) + 573.9 (oi) +3006.6 (D;) + 3804.4 (oJ') + 57c0 cni I + E 6 4 c ( o _ i .) + z 2 B ( o o . ,) + 5 1 4 ( n o . ,) + 1 0 1 8 ( o J . , , )
  • 42. A {t [f ;i4 I T r I il it :t t l rJ 1521 (Der) +1e50 (Dur) +717 (or') +3?58 (0E.,) + t ,l ,1 'i rt i 4755 ( o[, ) + 72oo(oI' ) + 1 0 8 0 0 ( o J , ) + qt I {r 22,00000. ...,. (4s) 182.4 to[) + 4 1 1 . 2t o j r l + 8 1 4 . 8 t o & l + 1257(oJr) + 1 5 6 0( o L ) + 5 7 3 . e ( + ) + 3 0 0 6 . 8 ( D J r ) + 3 8 0 4 . 4( D ; ) + 5?60 (oi) + 8640 (D;) + 2zB (o_) + 514 (D;2) + 1o 1 B ( o f r + ) ,ll 1571 (oor) + 1e50(DE2) + 717 (oir) + 3?58 (%) + 47s5(orr)+ :J i fr ,I ,f; 7 2 C O( o r , ) + 1 CrB (fr) 00 + n + 22, 00000. .rl :;l z "lz :f o... (49) . 1 8 2 . 4( o i . ) + 4 1 1 . 2( o i ) + 814.8 toit + 1 2 5 7t o $ l + 1560 toil 573.e t {. I + 3 0 0 6 . 8 ( o & ) + 3 8 0 4 . 4 (o,i. + + ) 5?60toi I + 8640 (o_i.) + 228 (orc) + 514 (o-r.) + 10 1 8 ( o f . ) + 157r (of.) + 1q5o (oo.) + 717 ({.) + 3758 (n[. ) + 4755(o[. + ) 72oo (oi.) + 10 B 0 o ( o J . ) 22, 00000. .. .. (so1 In our case we treat (Orta) and (oJa) as if they were cho ic e varj.ables say (Ura) and (Vra) respectiveJ_y. Therefore the above eqns, for t _ j , 2 and 3 can be expres sed as belorv t