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.

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.

Marketing

20th Edition

ISBN:9780357033791

Author:Pride, William M

Publisher:Pride, William M

Chapter19: Pricing Concepts

Section: Chapter Questions

Problem 6DRQ

See similar textbooks

Similar questions

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?
Jose Martinez of El Paso had developed a polished stainless-steel tortilla machine that makes it a “showpiece” for display in Mexican restaurants. He needs to develop a 5-month aggregate plan. His forecast of capacity and demand follows: Month 1 2 3 4 5 Demand 150 160 130 200 210 Regular capacity 150 150 150 150 150 Overtime capacity 20 20 10 10 10 Subcontracting: 100 units available over the 5-month period (NOT 100 units each month) Beginning inventory: 0 units Ending inventory required at the last month (i.e. month 5): 20 units. Costs Regular-time cost per unit $100 Overtime cost per unit $125 Subcontracting cost per unit $135 Inventory holding cost per unit per month $3 Assume that backorders are not permitted. a) Find an aggregate production plan using the intuitive lowest cost approach. (i.e. Develop an aggregate plan using the transportation method). b) State the corresponding…
Q. Jack is concerned about his company’s corporate image and has decided against using hires and fires. Instead, he has asked you to consider a chase aggregate plan using the current workforce supplemented by either overtime or undertime to change capacity to match demand exactly. He has asked for the following information from you: (a) How many production hours would be required each period to produce the exact quantity needed? (b) How many regular-time production hours are available each period? (c) How many overtime production hours would be needed each period? (d) Show what would happen if this plan were implemented. (e) Calculate the costs associated with this plan. (f) Evaluate the plan in terms of cost, customer service, operations, and human resources. (g) Compare this chase strategy with level strategy and conclude which is better.
List the stra tegic objectives of aggregate planning. Whichone of these is most often addressed by the quantitative techniquesof aggregate planning? Which one of these is generallythe most important?
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…
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…
Prepare a master production schedule with the information given as follows. The forecast for each week of am eight week schedule is 50 units. The MPS rule is to schedule production if the projected on hand inventory would be negative without it. Customer orders are as follows. Production lot size is 75, safety stock is 10 and no beginning on hand inventory. Calculate available to promise (ATP) quantity for each period. Week Customer Orders 1 52 2 35 3 20 4 12 Period Forecast Cust.Ord. SS Proj. OH MPS ATP
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…
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…
The president of Hill Enterprises, Terri Hill, projects the firm's aggregate demand requirements over the next 8 months as follows: January 1,400 May 2,100 February 1,700 June 2,100 March 1,600 July 1,700 April 1,900 August 1,500 Her operations manager is considering a new plan, which begins in January with 200 units of inventory on hand. Stockout cost of lost sales is $60 per unit. Inventory holding cost is $20 per unit per month. Ignore any idle-time costs. Evaluate the following plans D and E. Plan D: Keep the current workforce stable at producing 1,600 units per month. In addition to the regular production, another 20% of the normal production units can be produced in overtime at an additional cost of $50 per unit. A warehouse now constrains the maximum allowable inventory on hand to 600 units or less. Note: Do not produce in overtime if production or inventory are adequate to cover demand.…
The president of Hill Enterprises, Terri Hill, projects the firm's aggregate demand requirements over the next 8 months as follows: January 1,400 May 2,200 February 1,600 June 2,200 March 1,800 July 1,800 April 1,800 August 1,400 Her operations manager is considering a new plan, which begins in January with 200 units of inventory on hand. Stockout cost of lost sales is $100 per unit. Inventory holding cost is $20 per unit per month. Ignore any idle-time costs. The plan is called plan C. Plan C: Keep a stable workforce by maintaining a constant production rate equal to the average gross requirements excluding initial inventory and allow varying inventory levels. Conduct your analysis for January through August. Part 2 The average monthly demand requirement=17751775 units. (Enter your response as a whole number.) Part 3 In order to arrive at the costs, first compute the ending inventory and stockout units for each month…
The president of Hill Enterprises, Terri Hill, projects the firm's aggregate demand requirements over the next 8 months as follows: January 1,400 May 2,200 February 1,600 June 2,200 March 1,800 July 1,800 April 1,800 August 1,400 Her operations manager is considering a new plan, which begins in January with 200 units of inventory on hand. Stockout cost of lost sales is $100 per unit. Inventory holding cost is $20 per unit per month. Ignore any idle-time costs. The plan is called plan C. Plan C: Keep a stable workforce by maintaining a constant production rate equal to the average gross requirements excluding initial inventory and allow varying inventory levels. Conduct your analysis for January through August. Part 2 The average monthly demand requirement=1775 units. (Enter your response as a whole number.) Part 3 In order to arrive at the costs, first compute the ending inventory and stockout units for each month by…