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Develop a production plan and calculate the annual cost for a firm whose demand forecast is fall, 11,000; winter, 8,000; spring, 6,000; summer, 13,000.  Inventory at the beginning of fall is 500 units. At the beginning of fall you currently have 30 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 overtim

Develop a production plan and calculate the annual cost for a firm whose demand forecast is fall, 11,000; winter, 8,000; spring, 6,000; summer, 13,000.  Inventory at the beginning of fall is 500 units. At the beginning of fall you currently have 30 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 overtim

Practical Management Science
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
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Develop a production plan and calculate the annual cost for a firm whose demand forecast is fall, 11,000; winter, 8,000; spring, 6,000; summer, 13,000.  Inventory at the beginning of fall is 500 units. At the beginning of fall you currently have 30 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 if overtime is necessary to prevent stockouts at the end of those quarters.  Overtime is not available during the fall.  Relevant costs are hiring, $100 for each temp; layoff $200 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.
a. What is the total cost for this plan?


### Production Planning Spreadsheet Explanation This spreadsheet is designed to assist with aggregate production planning, providing details needed for cost estimation and workforce management across different time periods (Fall, Winter, Spring, Summer). #### Relevant Information - **Backorder Cost per Unit:** $10.00 - **Holding Cost per Unit:** $5.00 - **Number of Workers:** 30 - **Hiring Cost per Worker:** $100.00 - **Layoff Cost per Worker:** $200.00 - **Production Time (hours) per Unit:** 2.0 - **Straight Time Labor Cost per Hour:** $5.00 - **Overtime Labor Cost per Hour:** $8.00 - **Working Time (hours/day):** 8.00 - **Work Days per Season:** 60.00 - **Beginning Inventory:** 500 units #### Aggregate Production Planning Requirements **Columns:** Fall, Winter, Spring, Summer. 1. **Forecast:** Each season's projected demand. 2. **Beginning Inventory:** Starting inventory for each period. 3. **Production Required:** - Calculated as Forecast minus Beginning Inventory. 4. **Production Hours Required:** - Number of units × Production Time per Unit. 5. **Overtime Hours:** - Based on additional hours needed if regular hours are insufficient. 6. **Total Hours Available:** - Number of workers × Working hours/day × Work days per season. 7. **Actual Production:** - Linked to total hours available and labor hours per unit. 8. **Ending Inventory:** - Beginning Inventory + Actual Production - Demand Forecast 9. **Workers Hired and Laid Off:** - Adjustments needed to meet production requirements. 10. **Costs:** - **Straight Time:** Production hours available × Straight time labor cost. - **Overtime:** Extra hours worked if applicable. - **Inventory Cost:** Associated with unused inventory. - **Backorder Cost:** Costs due to unmet demand. - **Hiring and Layoff Costs:** Based on worker changes. 11. **Total Costs:** - Sum of all relevant costs. This spreadsheet provides a comprehensive framework for determining labor and cost logistics in production planning, aiming to optimize efficiency and cost-effectiveness across different seasonal demands.
Transcribed Image Text:### Production Planning Spreadsheet Explanation This spreadsheet is designed to assist with aggregate production planning, providing details needed for cost estimation and workforce management across different time periods (Fall, Winter, Spring, Summer). #### Relevant Information - **Backorder Cost per Unit:** $10.00 - **Holding Cost per Unit:** $5.00 - **Number of Workers:** 30 - **Hiring Cost per Worker:** $100.00 - **Layoff Cost per Worker:** $200.00 - **Production Time (hours) per Unit:** 2.0 - **Straight Time Labor Cost per Hour:** $5.00 - **Overtime Labor Cost per Hour:** $8.00 - **Working Time (hours/day):** 8.00 - **Work Days per Season:** 60.00 - **Beginning Inventory:** 500 units #### Aggregate Production Planning Requirements **Columns:** Fall, Winter, Spring, Summer. 1. **Forecast:** Each season's projected demand. 2. **Beginning Inventory:** Starting inventory for each period. 3. **Production Required:** - Calculated as Forecast minus Beginning Inventory. 4. **Production Hours Required:** - Number of units × Production Time per Unit. 5. **Overtime Hours:** - Based on additional hours needed if regular hours are insufficient. 6. **Total Hours Available:** - Number of workers × Working hours/day × Work days per season. 7. **Actual Production:** - Linked to total hours available and labor hours per unit. 8. **Ending Inventory:** - Beginning Inventory + Actual Production - Demand Forecast 9. **Workers Hired and Laid Off:** - Adjustments needed to meet production requirements. 10. **Costs:** - **Straight Time:** Production hours available × Straight time labor cost. - **Overtime:** Extra hours worked if applicable. - **Inventory Cost:** Associated with unused inventory. - **Backorder Cost:** Costs due to unmet demand. - **Hiring and Layoff Costs:** Based on worker changes. 11. **Total Costs:** - Sum of all relevant costs. This spreadsheet provides a comprehensive framework for determining labor and cost logistics in production planning, aiming to optimize efficiency and cost-effectiveness across different seasonal demands.
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