Month 1 2 3 4 Demand 25,000 16,000 15,000 19,000 Month 5 6 7 8 Demand 32,000 29,000 27,000 22,000 Month 9 10 11 12 Demand 14,000 15,000 20,000 6,000
Climate Control, Inc., makes expedition-quality rain gear
for outdoor enthusiasts. Management prepared a
sales (in suits) for next year and now must prepare a produc-
tion plan. The company has traditionally maintained a level
workforce strategy. All nine workers are treated like family
and have been employed by the company for a number of
years. Each employee can produce 2,000 suits per month.
At present, finished goods inventory holds 24,000 suits. The
demand forecast follows:
Use the Sales and Operations Planning with Spreadsheets
Solver in OM Explorer or develop your own spreadsheet
models to address the following questions.
a. Management is willing to authorize overtime in pe-
riods for which regular production and current lev-
els of anticipation inventory do not satisfy demand.
However, overtime must be strictly limited to no more
than 20 percent of regular-time capacity. Management
wants to avoid stockouts and backorders and is not
willing to accept a plan that calls for shortages. Is it
feasible to hold the workforce constant, assuming that
overtime is only used in periods for which shortages
would occur?
b. Assume that management is not willing to authorize
any overtime. Instead, management is willing to negoti-
ate with customers so that backorders may be used as a
supply option. However, management is not willing to
carry more than 5,000 suits from one month to the next
in backorder. Is it feasible to hold the workforce constant,
assuming that a maximum backorder of 5,000 suits may
be maintained from month to month?
c. Assume management is willing to authorize the use of
overtime over the next four months to build additional
anticipation inventory. However, overtime must be
strictly limited to no more than 20 percent of regular-
time capacity. Management wants to avoid stockouts and
backorders and is not willing to accept a plan that calls
for shortages. Is it feasible to hold the workforce constant,
assuming that overtime is only used in months 1–4?
If not, in which months would additional overtime be
required?
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