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Examination - 1 Production Planning and Control 1 October 2013/time Duration 120 Minutes/Cloosed Book

Krakatau Steel is considering production planning for 2014 based on demand data from 2012-2013. Total steel demand has increased each year. They have 6 production lines that can produce 2.5 tons per line group. Regular operations cost $2200 per line group daily, overtime is $4000. Inventory holding cost is $700 per ton annually. Changeover costs between $6000-8000 depending on if the line is shutdown or not. The production manager needs to 1) forecast 2014 demand and evaluate forecast error, 2) build aggregate production plan for 2014 including production strategy and costs, 3) determine master production schedule using percentage and Bitran & Hax approaches, and 4) when to use Bitran & Hax approach

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Syauqi Ramadhan
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46 views

Examination - 1 Production Planning and Control 1 October 2013/time Duration 120 Minutes/Cloosed Book

Krakatau Steel is considering production planning for 2014 based on demand data from 2012-2013. Total steel demand has increased each year. They have 6 production lines that can produce 2.5 tons per line group. Regular operations cost $2200 per line group daily, overtime is $4000. Inventory holding cost is $700 per ton annually. Changeover costs between $6000-8000 depending on if the line is shutdown or not. The production manager needs to 1) forecast 2014 demand and evaluate forecast error, 2) build aggregate production plan for 2014 including production strategy and costs, 3) determine master production schedule using percentage and Bitran & Hax approaches, and 4) when to use Bitran & Hax approach

Uploaded by

Syauqi Ramadhan
Copyright
© © All Rights Reserved
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Download as PDF, TXT or read online on Scribd
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EXAMINATION -1

PRODUCTION PLANNING AND CONTROL


1 OCTOBER 2013/TIME DURATION 120 MINUTES/CLOOSED BOOK
CASE PROBLEM 1:
Krakatau Steel (KS) is one of company producing wide range of steel products. The production
manager of KS is considering latest data of production and sales to decide production planning for
2014. Here are available data:
Inventory Policy
Total Steel Demand 2012-203 (in tons)
At the end of Des 2013 = 500 tons
2012 2013 At the end of Des 2014 = 650 tons
Quarter-1 700 740
Quarter-2 900 980 Production facility
Production lines = 6 line-group
Quarter-3 780 740
Production rate = 2,5 ton/line group
Quarter-4 600 700
Cost information
Regular operation cost = 2200 US$/line-group/day
Overtime operating cost = 4000 US$/line-group/day
Holding cost = 700 US$/ton/year
Setup cost for operating line group = 8000 US$/line group
Shutdown cost for stopping line group = 6000 US$/line group
Question 1&2:
1. Determine steel demand for 2014. Give your reason for choosing a forecasting method and
evaluate the error of your forecast demand.
2. Based on forecast demand resulted from question no.1,
a. Build aggregate production planning for 2014.
b. What production strategy you use? Explain your reason by using data.
c. Calculate the total cost of production planning for 2014

CASE PROBLEM 2:
Continuing with case problem 1, the production manager of KS is also considering a master
production schedule foe 2014. He has additional data as follows:

Safety Forecasted Demand 2014


Line of Product % sales Kij Inv
Stock Q-1 Q-2 Q-3 Q-4
Flat 58%
CRC-1 18% 1,4 71 80 92 120 97 83
CRC-2 25% 1,5 66 120 120 156 126 108
CRC-3 15% 1,2 83 80 90 117 95 81
Long 42%
Bil-8 10% 1,1 63 40 65 85 69 59
Bil-10 10% 1,2 50 40 60 78 63 54
Bil-17 20% 1,1 54 60 130 170 138 118

Setup cost of line group for flat family product is 12000 US$/setup and for long family product is
8000 US$/setup. When calculate the upper limit of family production (Ui), the production manager
decide to cover two quarterly demand ahead (n=2).

Question 3 & 4.
Base on your aggregate planning resulted from
3. By percentage approach, determine master production schedule
4. Determine master production schedule by using Bitran & Hax approach. When Bitran & Hax
approach is choosing to make master production schedule?

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