A stock or s+ТуpeChase Production Plan: Example• Manager T. C. Downs of Plum Engines, a producer of lawn mowersand leaf blowers, must develop an aggregate plan given the forecastfor engine demand shown in the table. The department has a regularoutput capacity of 130 engines per month. Regular output has a costof $60 per engine. The beginning inventory is zero engines. Overtimehas a cost of $90 per engine.• Develop a chase plan that matches the forecast and compute thetotal cost of your plan. Regular production can be less than regularcapacity.3.4.78.MONTH1140120125125140135Forecast120135Chase Production Plan Calculation

Forecasting is the activity of making estimated valuations of future activities based on past and…

Answered: • Manager T. C. Downs of Plum Engines,…

Marketing

20th Edition

ISBN:9780357033791

Author:Pride, William M

Publisher:Pride, William M

Chapter19: Pricing Concepts

Section: Chapter Questions

Problem 6DRQ

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A. When aggregate planning seeks to influence demand and supply, both the marketing and operations functions are involved. In this case, the goal is generally to find: a. A lower total cost plan b. A higher profit plan c. A higher sales revenue plan d. A lower cost of goods manufactured plan B. In a market situation where demand is exceeding supply, which from the following list would you generally work on first? a. Distribution b. Work force level c. Promotion d. Price
Planners for a company that makes several models of skateboards are about to prepare the aggregate plan that will cover six periods. They have assembled the following information. Period 1 2 3 4 5 6 Total Forecast 200 200 300 400 500 200 1,800 Costs Output Regular time=$2 per skateboard Overtime =$3 per skateboard Subcontract =$6 per skateboard Inventory =$1 per skateboard per period on average inventory Back orders =$5 per skateboard per period They now want to evaluate a plan that calls for a steady rate of regular-time output, mainly using inventory to absorb the uneven demand but allowing some backlog. Prepare an aggregate plan and determine its cost using the preceding information.
3) Gang Aft Agley, a manufacturing company, faces the aggregate planning problem shown in the table below. Cost of regular production is $5 per unit, the cost of producing the same unit on overtime is $7, the cost of subcontracting is $8 per unit, and the cost of carrying a unit in inventory from one month to the next is $2. January February March April May Forecast 500 750 1200 650 300 Beginning Inventory 100 Regular Time Overtime Subcontracting Ending Inventory The labor contract at the plant prohibits both overtime and subcontracting output to exceed 300 units in any five month window. The plant capacity is 500 units per month produced using two shifts, regardless of the number of days in a month. By policy, management wants to avoid stockouts. Formulate the aggregate plan using linear programming and solve it using Solver.
Southeast Soda Pop, Inc., has a new fruit drink for which it has high hopes. John Mittenthal, the production planner, has assembled the following cost data and demand forecast: demand forecast. Quarter Forecast 1 1,900 2 1,200 3 1,600 4 800 Costs/Other Data Previous quarter's output=1,200 cases Beginning inventory=0 cases Stockout cost of backorders=$160 per case Inventory holding cost=$40 per case at end of quarter Hiring employees=$35 per case Terminating employees=$80 per case Subcontracting cost=$65 per case Unit cost on regular time=$30 per case Overtime cost=$20 extra per case Capacity on regular time=1,900 cases per quarter John's job is to develop an aggregate plan. The three initial options he wants to evaluate are: • Plan A: a strategy that hires and fires personnel as necessary to meet the forecast. • Plan B: a level strategy. • Plan C: a level strategy that…
manager has prepared a forecast of expected aggregate demand for the next six months. Develop an aggregate plan to meet this demand given this additional information: A level production rate of 1000 units per month can be used. Backorders are allowed, and they are charged at the rate of $8 per unit per month. Inventory holding costs are $1 per unit per month based on maximum inventory. Determine the cost of this plan if regular time cost is $20 per unit, beginning inventory is zero, and initial backlog from previous plan is 100. Month Forecast 1 800 2 100 3 1200 4 1100 5 1000 6 900 a. Prepare an aggregate plan.b. Prepare an aggregate plan if the management decided to switch to chase…
A manager is attempting to put together an aggregate production plan for the coming nine months. She has obtained forecasts of aggregate demand for the planning horizon. The plan must deal with highly seasonal demand; demand is relatively high in months 3 and 4, and again in month 8, as can be seen below: The company has 20 permanent employees, each of whom can produce 10 units of output per month at a cost of $6 per unit. Inventory holding cost is $5 per unit per month, and back-order cost is $10 per unit per month. The manager is considering a plan that would involve hiring two people to start working in month 1, one on a temporary basis who would work until the end of month 5. The hiring of these two would cost $500. Beginning inventory is 0.Start with 20 permanent workers. Prepare a minimum cost plan that may use some combination of hiring ($250 per worker), subcontracting ($8 per unit, maximum of 20 units per month, must use for at least three consecutive months), and overtime…
. Manager T. C. Downs of Plum Engines, a producer of lawn mowers and leaf blowers, must developan aggregate plan given the forecast for engine demand shown in the table. The department has aregular output capacity of 130 engines per month. Regular output has a cost of $60 per engine. Thebeginning inventory is zero engines. Overtime has a cost of $90 per engine.a. Develop a chase plan that matches the forecast and compute the total cost of your plan. Regularproduction can be less than regular capacity. b. Compare the costs to a level plan that uses inventory to absorb fluctuations. Inventory carryingcost is $2 per engine per month. Backlog cost is $90 per engine per month. There should not bea backlog in the last month.MONTH1 2 3 4 5 6 7 8 TotalForecast 120 135 140 120 125 125 140 135 1,040
The planner at a company that makes garden tractors is about to prepare an aggregate production plan that will cover the next 6 months. She has collected the following information: Month Demand Forecast Above the available capacity through permanent workforce 1 1,000 2 1,000 3 2,000 4 3,000 5 4,000 6 1,000 Total: 12,000 Production per month = 20 units per worker Initial inventory = 500 units Desired ending inventory (at the end of month 6) = 0 units Cost: Hire cost = $500 per temporary worker Inventory = $10 per tractor per month Backorder = $150 per tractor per month The optimum aggregate plan is: Month 1 2 3 4 5 6 Total Forecast Demand above regular capacity 1,000 1,000 2,000 3,000 4,000 1,000 12,000 # of temporary workers required 50 50 100 150 200 50 Temp. Workers hired 25 25 50 75 0 0 Temp. workers laid off 0…
A Pizza Company has a demand forecast for the next 12 months that is shown in Table 1 The current workforce of 100 staff can produce 1500 cases of pizzas per month. (a) Prepare a production plan that keeps the output level. How much warehouse space would the company need for this plan? (b) Prepare a demand chase plan. What implications would this have for staffing levels, assuming that the maximum amount of overtime would result in production levels of only 10 per cent greater than normal working hours? Table 1 demand forecast Month Demand (cases per month) January 600 February 800 March 1000 April 1500 May 2000 June 1700 July…
The president of Hill Enterprises, Terri Hill, projectsthe firm’s aggregate demand requirements over the next 8 monthsas follows:Jan. 1,400 May 2,200Feb. 1,600 June 2,200Mar. 1,800 July 1,800Apr. 1,800 Aug. 1,800 Her operations manager is considering a new plan, whichbegins in January with 200 units on hand. Stockout cost of lostsales is $100 per unit. Inventory holding cost is $20 per unit permonth. Ignore any idle-time costs. The plan is called plan A.Plan A: Vary the workforce level to execute a strategy thatproduces the quantity demanded in the prior month. TheDecember demand and rate of production are both 1,600 unitsper month. The cost of hiring additional workers is $5,000 per100 units. The cost of laying off workers is $7,500 per 100 units.Evaluate this plan.
Southeast Soda Pop, Inc., has a new fruit drink forwhich it has high hopes. John Mitten thai, the production planner,has assembled the fo llowing cost data and demand forecast: John's job is to develop an aggregate plan. The three initialoptions he wants to evaluate are:• Plan A: a strategy that hires and fires personnel as necessaryto meet the forecast.• Plan B: a level strategy.• Plan C: a level strategy that produces 1,200 cases per quarterand meets the fo recast demand with inventory and subcontracting.a) Which strategy is the lowest-cost plan?b) If you are John's boss, the VP for operations, which p lan doyou implement and why?
Given the projected demands for the next six months, prepare an aggregate plan that uses inventory, regular time and overtime, and backorders. The plan must wind up with no units in ending inventory in Period 6. Regular time capacity is 160 units per month. There are 10 units backlogged from before. Overtime cost is $30 per unit, backorder cost is $20 per unit, inventory holding cost is $5 per unit, regular time cost of $20 per unit, and beginning inventory is zero. Month Forecast 1 180 2 170 3 140 4 150 5 130 6 150 a. Prepare an aggregate plan with inventory and backlog allowed. Overtime and subcontracting are not allowed.b. Prepare an aggregate plan if the management decided to switch to…

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