Operations Management
13th Edition
ISBN: 9781259667473
Author: William J Stevenson
Publisher: McGraw-Hill Education
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Chapter 11, Problem 13P
Summary Introduction
To determine: The total cost of the plan using subcontract with no overtime.
Introduction: The aggregate plan is the output of sales and operations planning. The major concern of aggregate planning is the production time and quantity for the intermediate future. Aggregate planning would encompass a time prospect of approximately 3 to 18 periods.
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An engineering plant has developed the accompanying supply, demand, cost and inventory data. The engineering plant has a constant workforce and meets all its demands. Allocate production capacity to satisfy demand at a minimum cost. What is the cost of this plan?
(Assume that back ordering is not a viable alternative for the plant)
Demand forecast
Period
Demand (Unit)
1
650
2
700
3
900
Supply Capacity available (units)
Period
Regular time
Overtime
Subcontract
1
350
100
250
2
450
100
250
3
500
100
250
Other Data
Initial Inventory
100 units
Regular-time cost per unit
R 50
Overtime cost per unit
R 65
Subcontract cost per unit
R 80
Carrying cost per unit per period
R 1
Back order cost per unit per period
R 4
Although the BackPack Company has always used a levelaggregate plan, Jill is interested in evaluating chase aggregateplans also. She has asked you to calculate how many hires and fi reswould be necessary to adjust capacity to meet demand exactlyeach period. If necessary, incur some undertime. Calculate thenumber of workers needed each period.
suppose that the demand for personal computers increased each month, as follows: Month Demand Month Demand January 410 April 620 February 320 May 430 March 500 June 380 In addition to the regular production capacity of 300 units per month, PM Computer Services can also produce an additional 200 computers per month by using overtime. Overtime production adds 20% to the cost of a personal computer. Determine a production schedule for PM that will minimize total cost.
Chapter 11 Solutions
Operations Management
Ch. 11 - What three levels of planning involve operations...Ch. 11 - What are the three phases of intermediate...Ch. 11 - Prob. 3DRQCh. 11 - Why is there a need for aggregate planning?Ch. 11 - What are the most common decision variables for...Ch. 11 - Prob. 6DRQCh. 11 - Briefly discuss the advantages and disadvantages...Ch. 11 - What are the primary advantages and limitations of...Ch. 11 - Briefly describe the planning techniques listed as...Ch. 11 - What are the inputs to master scheduling? What are...
Ch. 11 - Prob. 11DRQCh. 11 - What general trade-offs are involved in master...Ch. 11 - Who needs to interface with the master schedule...Ch. 11 - How has technology had an impact on master...Ch. 11 - Service operations often face more difficulty in...Ch. 11 - Name several behaviors related to aggregate...Ch. 11 - Compute the total cost for each aggregate plan...Ch. 11 - A manager would like to know the total cost of a...Ch. 11 - Determine the total cost for this plan given the...Ch. 11 - a. Given the following forecast and steady regular...Ch. 11 - Manager T. C. Downs of Plum Engines, a producer of...Ch. 11 - Manager Chris Channing of Fabric Mills, Inc., has...Ch. 11 - SummerFun. Inc., produces a variety of recreation...Ch. 11 - Nowjuice, Inc., produces Shakewell fruit juice. A...Ch. 11 - Wormwood, Ltd., produces a variety of furniture...Ch. 11 - Refer to Solved Problem 1. Prepare two additional...Ch. 11 - Refer to Solved Problem 1. Suppose another option...Ch. 11 - Prob. 12PCh. 11 - Prob. 13PCh. 11 - Prob. 14PCh. 11 - Prob. 15PCh. 11 - Refer to Example 3. Suppose that regular-time...Ch. 11 - Prob. 17PCh. 11 - Prob. 18PCh. 11 - Prepare a master production schedule for...Ch. 11 - Update the master schedule shown in Figure 11.11...Ch. 11 - Prepare a master schedule like that shown in...Ch. 11 - Determine the available-to-promise (ATP)...Ch. 11 - Prepare a schedule like that shown in Figure 11.12...Ch. 11 - The objective is to choose the plan that has the...Ch. 11 - Prob. 2CQ
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- Given the demand forecast, cost, and operating data shown below; evaluate the following production plans. $100 $110 $12 $18 Manufacturing cost per unit Subcontracting cost per unit Regular hourly wage rate Overtime hourly wage rate Regular hours per day per worker Labor hours per unit Layoff cost per worker Hiring cost per worker Inventory holding cost per unit per month Initial workforce 8 $500 $400 $2 250 Month Demand Working days 22 January February 11,000 15,000 19 March 32,000 21 21 April Мay June 25,000 30,000 14.500 a) Produce to meet demand by varying the size of the workforce. Satisfy demand for part-time work with overtime. Find the total cost. Workers Workers Fired Hr Available /Worker days×8 hr) (22x8)=176 | (44000/176)=250 Hours Workers Needed Month Demand Req. Hired Jan. 11,000 15,000 (11000×4)=44,000 60,000 Feb. 152 394 32,000 25,000 March 128,000 April May June 30,000 14.500 127,500 597 485 Hours Required Regular Hours azailable 44,000 59,888 127,848 99,960 119,856…arrow_forwardTuff-Rider, Inc., manufactures touring bikes and mountain bikes in a variety of frame sizes, colors, and component combinations. Identical bicycles are produced in lots of 110. The projected demand, lot size, and time standards are shown in the following table: i Item Demand forecast Lot size Standard processing time Standard setup time Touring 4,000 units/year 130 units 0.20 hour/unit 2 hours/lot Mountain 10,000 units/year 110 units 0.50 hour/unit 3 hours/lot The shop currently works 8 hours a day, 5 days a week, 48 weeks a year. It operates five workstations, each producing one bicycle in the time shown in the table. The shop maintains a 15 percent capacity cushion. How many workstations will be required next year to meet expected demand without using overtime and without decreasing the firm's current capacity cushion? The number of workstations required next year is. (Enter your response rounded up to the next whole number.)arrow_forwardDemand for doughnut holes on Saturdays at Don’s Doughnut Shoppe is shown in the following table. Demand(dozens) RelativeFrequency Demand(dozens) RelativeFrequency 19 .02 25 .10 20 .06 26 .14 21 .17 27 .10 22 .02 28 .03 23 .14 29 .05 24 .17 a-1. Determine the optimal number of doughnut holes, in dozens, to stock if labor, materials, and overhead are estimated to be $4.80 per dozen, doughnut holes are sold for $6.40 per dozen, and leftover doughnut holes at the end of each day are sold the next day at half price. (Round your answer to the nearest whole number.) Optional number of doghnuts: ??? What is the resulting service level: ???arrow_forward
- 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?arrow_forwardPlan 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, 80,640; March, 67,200; April, 100,280; May, 40,280. Productivity is four units per worker hour, eight hours per day, 21 days per month. Assume zero Inventory on February 1. Costs are: hiring, $50 per new worker, layoff, $70 per worker laid off, Inventory holding, $11 per unit-month; regular time labor, $12 per hour; overtime, $18 per hour; backorder, $22 per unit. Develop a production plan and calculate…arrow_forward10. The president of Hill Enterprises, Terri Hill, projects the firm's aggregate demand requirements over the next 8 months as follows: 2,100 January February 1,200 May 1,500 June 2,100 1,700 1,800 March July August 1,900 April 1,300 Her operations manager is considering a new plan, which begins in January with 200 units on hand and ends with zero inventory. Stockout cost of lost sales is $125 per unit. Inventory holding cost is $20 per unit per month. Ignore any idle-time costs. The plan is called plan B. Plan B: Produce at a constant rate of 1,200 units per month, which will meet minimum demands. Then use subcontracting, with additional units at a premium price of $75 per unit. Subcontracting capacity is limited to 900 units per month. Evaluate this plan by computing the costs for January through August. In order to arrive at the costs, first compute the ending inventory and subcontracting units for each month by filling in the table below (enter your responses as whole numbers).…arrow_forward
- A company has the beginning workforce is 120 employees. The monthly output per employee is 100 units. The costs to hire and lay off a worker are $2,000 and $3,000, respectively. The cost to carry an item in inventory for one month is estimated at $10, and the stockout cost is $25 per unit. What is cost of the level sales and operations plan? Month 1 Demand 6,500 A) $224,000 B) $127,000 C) $291,000 D) $345,000 2 3 8,700 5,300 4 5 8,700 14,200 6 4,600 Total 48,000arrow_forwardThe Company employs workers who lay cables. The company prides itself on good service and strives to complete all services orders with the planning period. Planning Period 1 2 3 4 5 Demand (HOURS) 21,000 18,000 30,000 12,000 24,000 Each worker puts in 600 Hours of regular time per planning period and can work as much as additional 100 Hours of overtime per period. The company pays regular time wages of $6000 per employee per period for any time worked up to 600 Hours per period. The overtime pay rate is $15 per Hour per employee. Hiring and Training costs are $8000 per employee. Layoffs (Firing) are $2000 per employee. Currently 40 Full Time workers work in this capacity. Prepare the Level Strategy Costing for the above requirementsarrow_forwardSuppose we are formulating a Master Production Schedule (MPS) for an item. The lot-size policy for this item calls for a fixed quantity of 300 units. Lead time for this item is three weeks. Week O inventory for this item is 400 units. There are no safety stock requirements. Here are the demand forecast and the booked orders for this item.... Week 1 2 3 4 5 6 Forecast 120 120 100 100 100 120 Booked 115 121 71 0 0 0 When the master schedule is complete. what will be the Projected On-Hand in Week 4?arrow_forward
- Using the cut-and-try method for aggregate operations planning, as described in the textbook, we can calculate ending inventory and safety stock as a percent of forecast demand. If beginning inventory = 300 units, the production requirement in units of output = 1,350 units, demand forecast = 1,500 units, then ending inventory and percent safety stock? a) 450 & 30% b) 150 & 20% c) 300 & 20% d) 150 & 10% e) 200 & 10%arrow_forwardCalculate MPS for all periodsarrow_forward1) How many pounds of shrimp should be brought in four weeks if Atlantic Seafood wants to maximize profit? 2) How many pounds of shrimp should be sold in four weeks if Atlantic Seafood wants to maximize profit? 3) What is the total profit for Atlantic Seafood if they follow the optimal solution?arrow_forward
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