Analytics Exercise: The Pudding

Manufacturing Aggregate Plan

The Situation

You are the operations manager for a manufacturing plant that

produces pudding food products. One of your important

responsibilities is to prepare an aggregate plan for the plant. This

plan is an important input into the annual budget process. The plan

provides information on production rates, manufacturing labor

requirements, and projected finished goods inventory levels for the

next year.

You make those little boxes of pudding mix on packaging lines in

your plant. A packaging line has a number of machines that are

linked by conveyors. At the start of the line, the pudding is mixed; it is

then placed in smal packets. These packets are inserted into the

smal pudding boxes, which are colected and placed in cases that

hold $48$ boxes of pudding. Finaly, $160$ cases are colected and put on

a palet. The palets are staged in a shipping area from which they

are sent to four distribution centers. Over the years, the technology

of the packaging lines has improved so that al the different flavors

can be made in relatively smal batches with no setup time to switch

between flavors. The plant has $15$ of these lines, but currently only

$10$ are being used. Six employees are required to run each line.

The demand for this product fluctuates from month to month. In

addition, there is a seasonal component with peak sales before

Thanksgiving, Christmas, and Easter each year. To complicate

matters, at the end of the first quarter of each year, the marketing

group runs a promotion in which special deals are made for large

purchases. Business is going wel, and the company has been

experiencing a general increase in sales.

The plant sends product to four large distribution warehouses

strategica ly located in the United States. Trucks move product daily.

The amounts shipped are based on maintaining target inventory

levels at the warehouses. These targets are calculated based on

anticipated weeks of supply at each warehouse. Current targets are

set at two weeks of supply.

In the past, the company has had a policy of producing very close

to what it expects sales to be because of limited capacity for storing

finished goods. Production capacity has been adequate to support

this policy.

A sales forecast for next year has been prepared by the

marketing department. The forecast is based on quarterly sales

quotas, which are used to set up an incentive program for the

salespeople. Sales are mainly to the large U$.$S$.$ retail grocers. The

pudding is shipped to the grocers from the distribution warehouses

based on orders taken by the salespeople.

Your immediate task is to prepare an aggregate plan for the

coming year. The technical and economic factors that must be

considered in this plan are shown next