Material Management

Class Note #1-B

Wagner Whitin
Algorithm

Prof. Yuan-Shyi Peter Chiu

Feb. 2011
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 M6: Wagner Whitin
Algorithm (page 4)

Example
~ A general model for Production Planning

Terms:

Periods: 1,2,3,.N

i: demand rate in period i

h : holding cost / item / period
K : setup cost
c : unit cost
Ci ( j:) cost of producing enough items for
period i thru. j at beginning of period i

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 M6: Wagner Whitin
Algorithm (page 5)

(B) Formula

Ci k ci i 1 ... j
(j)

hi 1 2i 2 ... ( j i )j
...[Eq.6.1]

Ci ( j)
MIN Ci Cj 1 ...[Eq.6.2]
i j N

Lowest cost from period i to N that

will satisfies demand

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 M6: Wagner Whitin
Algorithm (page 6)

[Eg.]
Demand
1Q 2Q 3Q 4Q
3000 2000 3000 2500

K $200 1 3000
C $0.1 2 2000
h $0.02 3 3000
4 2500
1 2 3 4

X2 X3 X4

P1 P2 P3 P4

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 M6: Wagner Whitin
Algorithm (page 7)

[Eg] solution:

C4 C K c( 4) h(0) 200 0.12500

4
(4)

450

C3 Min C3 C4 [ K c( 3) h(0)] $450

(3)

200 0.13000 0 $450

$950
C3 K C( 3 4 ) h 4
(4)

200 0.1 3000 2500

0.02 2500
200 550 50
$800 *
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 M6: Wagner Whitin
Algorithm (page 8)

[Eg] solution:
C2 C3 [ K c( 2) h(0)] C3
(2)

200 0.12000 0 $800

$1200
C2 Min C2 C4 [ K C( 2 3 ) h 3 ] C4
(3)

200 0.1 2000 3000

0.02 3000 $450
[200 500 60] $450
$1210
C2 (4)
[K C( 2 3 4) h ( 3 2 4)]
200 0.1 2000 3000 2500
0.02 3000 2 2500
200 750 160 $1110 *
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 C1 C2 [ K c( 1) h(0)] $1110
(1)

200 300 1110 $1610

C1 C3 [ K C( 1 2 ) h 2 ]
(2)

$800
200 500 40 800
C1=Min $1,540 *

C1 C4 [ K C( 1 2 3) h 2 2 3 ]
(3)

C4
200 800 0.02 2000 6000
$450
$1610

C1 (4)
[K C( 1 2 3 4)
h ( 2 2 3 3 4)]
200 1050 0.02 (2000 6000
7500)
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$1,560
 M6: Wagner Whitin
Algorithm (page 10)

[Eg] solution:
[Answer]
C 1 C 1 C 3 $1,540
(2)

To produce enough items from 1st

period to 2nd period, then C 3 C 3
(4)

To produce enough items from 3rd

period to 4th period.
In other words , production plan is:
to produce 5000 items at the beginning
of the first period, then to produce 5500
items at the beginning of the 3rd period .
Pi P1 , P2 , P3 , P4
5000, 0 , 5500 , 0
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~ The End ~
~ The End ~