Manufacturing Aggregate Planning. Manufacturers Inc. (MI) currently has a labor force of 10, which can produce 500 units per period. The cost of labor is now $2,400 per period, per employee. The company has a long-standing rule that does not allow overtime. In addition, the product cannot be subcontracted due to the specialized machinery that MI Uses to produce it. As a result, MI can only increase/decrease production by hiring or laying off employees. The cost is $5,000 to hire an employee and $5,000 to lay off an employee. Inventory-carrying costs are $100 per unit remaining at the end of each period. The inventory level at the beginning of period 1 is 300 units. The forecast demand in each of 3 periods is given in the table below.

Manufacturing Aggregate Planning. Manufacturers Inc. (MI) currently has a labor force of 10, which can produce 500 units per period. The cost of labor is now $2,400 per period, per employee. The company has a long-standing rule that does not allow overtime. In addition, the product cannot be subcontracted due to the specialized machinery that MI Uses to produce it. As a result, MI can only increase/decrease production by hiring or laying off employees. The cost is $5,000 to hire an employee and $5,000 to lay off an employee. Inventory-carrying costs are $100 per unit remaining at the end of each period. The inventory level at the beginning of period 1 is 300 units. The forecast demand in each of 3 periods is given in the table below.

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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Manufacturing Aggregate Planning. Manufacturers Inc. (MI) currently has a labor force of 10, which can produce 500 units per period. The cost of labor is now $2,400 per period, per employee. The company has a long-standing rule that does not allow overtime. In addition, the product cannot be subcontracted due to the specialized machinery that MI Uses to produce it. As a result, MI can only increase/decrease production by hiring or laying off employees. The cost is $5,000 to hire an employee and $5,000 to lay off an employee. Inventory-carrying costs are $100 per unit remaining at the end of each period. The inventory level at the beginning of period 1 is 300 units. The forecast demand in each of 3 periods is given in the table below. Aggregate Demand Period 1 = 730 Period 2 = 620 Period 3 = 420 a) Compute the costs of the chase strategy. b) Compute the costs for a level strategy. c) Compare the two strategies
Develop a chase aggregate plan for Draper using apermanent workforce of 12 employees supplemented by overtime.All demand must be met each period.(a) Show what would happen if this plan were implemented.(b) Calculate the costs associated with this plan.(c) Evaluate the plan in terms of cost, customer service,operations, and human resources.
evelop a production plan and calculate the annual cost for a firm whose demand forecast is fall, 9,700; winter, 8,000; spring, 7,000; summer, 11,700. Inventory at the beginning of fall is 485 units. At the beginning of fall you currently have 35 workers, but you plan to hire temporary workers at the beginning of summer and lay them off at the end of summer. In addition, you have negotiated with the union an option to use the regular workforce on overtime during winter or spring only if overtime is necessary to prevent stockouts at the end of those quarters. Overtime is not available during the fall. Relevant costs are hiring, $80 for each temp; layoff, $160 for each worker laid off; inventory holding, $5 per unit-quarter; backorder, $10 per unit; straight time, $5 per hour; overtime, $8 per hour. Assume that the productivity is 0.5 unit per worker hour, with eight hours per day and 60 days per season. In each quarter, produce to the full output of your regular workforce, even if that…
Plan production for a four-month period: February through May. For February and March, you should produce to exact demand forecast. For April and May, you should use overtime and inventory with a stable workforce; stable means that the number of workers needed for March will be held constant through May. However, government constraints put a maximum of 5,000 hours of overtime labor per month in April and May (zero overtime in February and March). If demand exceeds supply, then backorders occur. There are 100 workers on January 31. You are given the following demand forecast: February, 90,000; March 65,000; April 110,000; May, 55,000. Productivity is four units per worker hour, eight hours per day, 20 days per month. Assume zero inventory on February 1. Costs are hiring, $50 per new worker; layoff, $70 per worker laid off; inventory holding, $10 per unit-month; straight-time labor, $10 per hour; overtime, $15 per hour; backorder, $20 per unit a. Find the total cost of this plan?
WSS company makes weatherproof surveillance systems for parking lots. Demand estimates for the next four quarters are 25, 9, 13, and 17 units. Prepare an aggregate plan that uses inventory, regular time and overtime and back orders. Subcontracting is not allowed. Regular time capacity is 15 units for quarters 1 and 2, 18 units for quarters 3 and 4. Overtime capacity is 3 units per quarter. Regular time cost is $2000 per unit, while overtime cost is $3000 per unit. Back order cost is $300 per unit per quarter; inventory holding cost is $100 per unit per quarter. Beginning inventory is zero. Questions At the end of quarter 3, what is the ending inventory of finished systems? Answer: No ending Inventory =0 What is the total cost? 15*2000 + 6*2300 +4*2600 + 9*2000 + 13*2000 + 17*2000 =$132, 200 What is the average cost per unit? Answer 132200 / 64 = $2,066.
WSS company makes weatherproof surveillance systems for parking lots. Demand estimates for the next four quarters are 25, 9, 13, and 17 units. Prepare an aggregate plan that uses inventory, regular time, and over time, and backorders. Subcontracting is not allowed. The regular time capacity is 15 units for quarters 1 and 2, 18 units for quarters 3 and 4. Overtime capacity is 3 units per quarter. The regular time cost is $2000 per unit, while the overtime cost is $3000 per unit. Backorder costs $300 per unit per quarter; inventory holding costs $100 per unit per quarter. The beginning inventory is zero. How many total units will be produced in quarter 1 for delivery in quarter 1? How many units in total will be used to fill back orders over the four quarters? What is the cost to produce one unit in Quarter 4 using overtime to fill a back order in quarter one?
Table shows the aggregate demand requirements of a manufacturing company. The operations manager is going to use a new plan, which begins in January with 200 units on hand and ends with zero inventory in August. Assume, Inventory holding cost is $20 per unit per month and stockout cost of lost sales is $100 per unit. The plan is called plan A. Compute the cost of plan A. Plan A: Vary the workforce level to execute a “chase” strategy by producing the quantity demanded in the prior month. The December demand and rate of production are both 1,600 units per month. The cost of hiring additional workers is $5,000 per 100 units. The cost of laying off workers is $7,500 per 100 units. Evaluate this plan.
The XYZ Company manufactures a seasonal product. At the present time, the company uses a level labor force as a matter of company policy. The company is afraid that if it lays off workers, it will not be able to rehire them or find qualified replacements. Does this company have an aggregate planning problem? Discuss.
The Walden Manufacturing Corp. has office support salaries of $4,000, factory supplies of $1,000,indirect labor of $6,000, direct materials of $16,000, advertising expense of $2,500, office expense of$14,000, and direct labor of $20,000. What is the total period cost?
A local firm manufactures children’s toys. The projected demand over the next four months for one particular model of toy robot is (given) Assume that a normal workday is eight hours. Hiring costs are $350 per worker and firing costs (including severance pay) are $850 per worker. Holding costs are $4.00 per aggregate unit held per month. Assume that it requires an average of 1 hour and 40 minutes for one worker to assemble one toy. Shortages are not permitted. Assume that the ending inventory for June was 600 of these toys and the manager wishes to have at least 800 units on hand at the end of October. Assume that the current workforce level is 35 workers. Find the optimal plan by formulating as a linear program.
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…
Planners for a company that makes several models of skateboards are about toprepare the aggregate plan that will cover six periods. They now want toevaluate a plan that calls for a steady rate of regular output, mainly usinginventory to absorb the uneven demand but allowing some backlog. Overtimeand subcontracting are not used because they want a steady output. They intendto start with zero inventory on hand in the first period. Prepare an aggregate planand determine its cost using the following information. Assume a level of outputrate of 300 units per period with regular time. Note that the planned endinginventory is zero. There are 15 workers, and each can produce 20 units per Period 1 2 3 4 5 6 Total Forecast 200 200 300 400 500 200 1800 Cost Information:Regular time = $2 per skateboardOvertime = $3 per skateboardSubcontract = $6 per skateboardInventory = $1 per skateboard per period on average inventoryBack orders = $5 per skateboard per period