gregate production plan for Bioway using (a) chase demand and (b) a mixed strategy where the current workforce is kept for April through August, and supplemented with overtime and subcontracting as needed.
gregate production plan for Bioway using (a) chase demand and (b) a mixed strategy where the current workforce is kept for April through August, and supplemented with overtime and subcontracting as needed.
Contemporary Marketing
18th Edition
ISBN:9780357033777
Author:Louis E. Boone, David L. Kurtz
Publisher:Louis E. Boone, David L. Kurtz
Chapter15: Distribution Channels And Supply Chain Management
Section15.4: Components Of The Supply Chain
Problem 1LO
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Question
Solve the problem using both chase demand and level production and determine which gives a better return.
![14-1. Bioway, Inc., a manufacturer of medical supplies, uses ag-
gregate planning to set labor and inventory levels for the
year. While a variety of items are produced, a standard kit
composed of basic supplies is used for planning purposes.
Demand varies with seasonal illnesses and the quarterly or-
dering policies of hospitals. The average worker at Bioway
can produce 1000 kits a month at a cost of $9 per kit dur-
ing regular production hours and $10 a kit during overtime
production. Completed kits can also be purchased from
outside suppliers at $12 each. Inventory carrying costs are
$2 per kit per month. Overtime is limited to regular pro-
duction, but subcontracting is unlimited. Due to high quality
standards and extensive training, hiring and firing costs are
$1500 per worker. Bioway currently employs 25 workers.
Given the demand forecast below, develop a six-month ag-
gregate production plan for Bioway using (a) chase demand
and (b) a mixed strategy where the current workforce is
kept for April through August, and supplemented with
overtime and subcontracting as needed.
Month
Demand
60,000
April
May
22,000
June
15,000
July
46,000
80,000
August
September
15,000](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F3c516783-d25d-4b34-b4fa-4d63a828f54e%2F482c73d5-5460-4831-84c9-4356901d1a67%2Fslz4i3o_processed.jpeg&w=3840&q=75)
Transcribed Image Text:14-1. Bioway, Inc., a manufacturer of medical supplies, uses ag-
gregate planning to set labor and inventory levels for the
year. While a variety of items are produced, a standard kit
composed of basic supplies is used for planning purposes.
Demand varies with seasonal illnesses and the quarterly or-
dering policies of hospitals. The average worker at Bioway
can produce 1000 kits a month at a cost of $9 per kit dur-
ing regular production hours and $10 a kit during overtime
production. Completed kits can also be purchased from
outside suppliers at $12 each. Inventory carrying costs are
$2 per kit per month. Overtime is limited to regular pro-
duction, but subcontracting is unlimited. Due to high quality
standards and extensive training, hiring and firing costs are
$1500 per worker. Bioway currently employs 25 workers.
Given the demand forecast below, develop a six-month ag-
gregate production plan for Bioway using (a) chase demand
and (b) a mixed strategy where the current workforce is
kept for April through August, and supplemented with
overtime and subcontracting as needed.
Month
Demand
60,000
April
May
22,000
June
15,000
July
46,000
80,000
August
September
15,000
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