Concept explainers
Slopes & Sleds (S&S) makes skis, snowboards, and high-end sledding equipment. As shown below, the demand for its products is highly seasonal. The company employs 10 workers who can each produce 200 units of various equipment per month. The cost of regular production is $8 per unit, overtime $12, and subcontracting $16. Overtime is limited to regular production each period. Subcontracting is unlimited. Hiring and firing costs are $500 per worker. Inventory holding costs are $2 per unit per month. Given the estimates of demand below, create an aggregate production plan for Slopes & Sleds and calculate the cost of the plan using:
- a. the current workforce level (supplemented with overtime and subcontracting as needed), b, chase demand.
- b. linear programming with Solver.
- c. subcontracting. The global sourcing department of Slopes & Sleds has located a company in China that can make S&S products for $9 a unit. Revise the production plan using Solver. How much money can be saved by outsourcing to China?
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