Exercise Chapter 14

1 Mary has received the following estimates of demand requirements

July
1000

August
1200

September
1400

October
1800

November
1800

December
1600

Assuming the stock out costs for lost sales of $100/unit.

cost regular prod $ 10
Inventory carrying cost of $25/unit/month,and zero beginning inventory
The cost of hiring additional workers is $3000/person, layoff is $6000/person
Evaluate which of this 3 plans is best ?
Plan A : Produce at steady rate of 1000 units/month & subcontract additional units at $60/unit
Plan B : Vary the workforce, assume 1 work force can make 100 units, the existing now is 13 workforce.
Using hiring/layoff
Plan C : keep the existing work force per month (13 workers). Subcontract the remainder demand
but have 300 units as beginning stock of July
2 S & S make skis and other snow boarding equipment. Its employee 10 workers who can produce 200/month/workers
Month
Demand
Jan
6400 Beginning inventory 0
Feb
7000 Regular production cost : $8/unit, overtime cost : $12/unit, subcontract cost : $16/unit
Mar
1500 Overtime is limited to regular production each period
Apr
500 Subcontracting capacity is unlimited
Mei
600 Inventory cost are $2 / unit
Jun
1400 Hiring & firing cost are $500/worker
Jul
1600
Agu
2000
Sep
1400
Okt
1500
Nov
5200
Des
6900
Create an aggregate production plan using :
a. The current workforce level ( supplemented with overtime & subcontract as needed)
b. Chase demand, if the workers can produce 200/month/worker

3 Fansforyou is a small private company that manufactures fans. Now he is using level production strategy
Month
Demand
Sep
1500
Oct
1000 Beginning inventory 0
Nov
600 Production rate : 100 fans per worker per month
Dec
600 Regular production cost : $40/fan, overtime cost : $60/fan, subcontract cost : $70/fan
Jan
600 Overtime capacity not to exceed regular production
Feb
800 Subcontracting capacity is unlimited
Mar
1000 Holding cost : $ 8/fan
Apr
1000 Hiring cost : $ 2000, firing cost : $ 3000
May
4000
Jun
6500
Jul
6000
Aug
4000
Evaluate which of this 3 plans is best ?
Plan 1 : using level production with 23 workers
Plan 2 : using chase demand strategy
Plan 3 : keep a steady 20 workers & supplement with overtime & subcontract as nee

1638800
1354000
1577400