Principles of Operations Management: Sustainability and Supply Chain Management (10th Edition)
Principles of Operations Management: Sustainability and Supply Chain Management (10th Edition)
10th Edition
ISBN: 9780134181981
Author: Jay Heizer, Barry Render, Chuck Munson
Publisher: PEARSON
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Chapter 13, Problem 19P

Dwayne Cole, owner of a Florida firm that manufactures display cabinets, develops an 8-month aggregate plan. Demand and capacity (in units) are forecast as follows:

Chapter 13, Problem 19P, Dwayne Cole, owner of a Florida firm that manufactures display cabinets, develops an 8-month

The cost of producing each unit is $1,000 on regular time, $1,300 on overtime, and $1,800 on a subcontract. Inventory carrying cost is $200 per unit per month. There is no beginning or ending inventory in stock, and no backorders are permitted from period to period.

Let the production (workforce) vary by using regular time first, then overtime, and then subcontracting.

a) Set up a production plan that minimizes cost by producing exactly what the demand is each month. This plan allows no backorders or inventory. What is this plan’s cost?

b) Through better planning, regular time production can be set at exactly the same amount, 275 units, per month. If demand cannot be met there is no cost assigned to shortages and they will not be filled. Does this alter the solution?

c) If overtime costs per unit rise from $1,300 to $1,400, will your answer to (a) change? What if overtime costs then fall to $1,200?

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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: May 2,100 January February 1,450 1,700 1,700 June 2,300 July 1,900 March April 1,700 August 1,300 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 $65 per unit. Inventory holding cost is $25 per unit per month. Ignore any idle-time costs. Evaluate the following plan. This exercise contains only Plan E. Plan E: Keep the current workforce, which is producing 1,600 units per month, and subcontract to meet the rest of the demand. Subcontract cost is $75 per unit. Month 10 December 1 January 2 February 3 March 4 April 5 May 6 June 7 July 8 August Demand 1,450 1,700 1,700 1,700 2,100 2,300 1,900 1,300 Production (Units) 1,600 1,600 1,600 1,600 1,600 1,600 1,600 1,600 Plan E Ending Subcontract (Units) Inventory 200 The total subcontracting cost = $ (Enter your response as…
The president of Hill​ Enterprises, Terri​ Hill, projects the​ firm's aggregate demand requirements over the next 8 months as​ follows:     January 1,500 May 2,300 February 1,700 June 2,100 March 1,700 July 1,900 April 1,700 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 ​$125 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. The average monthly demand requirement=18001800 units. ​(Enter your response as a whole​ number.) In order to arrive at the​ costs, first compute the ending inventory and stockout units for each month by filling in…
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