Shoney Video Concepts produces a line of videodisc players to be linked to perso
ID: 2746644 • Letter: S
Question
Shoney Video Concepts produces a line of videodisc players to be linked to personal computers for video games. Videodiscs have much faster access time than tape. With such a computer/video link, the game becomes a very realistic experience. In a simple driving game where the joystick steers the vehicle, for example, rather than seeing computer graphics on the screen, the player is actually viewing a segment of a videodisc shot from a real moving vehicle. Depending on the action of the player (hitting a guard rail, for example), the disc moves virtually instantaneously to that segment and the player becomes part of an actual accident of real vehicles (staged, of course).
Shoney is trying to determine a production plan for the next 12 months. The main criterion for this plan is that the employment level is to be held constant over the period. Shoney is continuing in its R&D efforts to develop new applications and prefers not to cause any adverse feelings with the local workforce. For the same reason, all employees should put in full workweeks, even if this is not the lowest-cost alternative. The forecast for the next 12 months is
Manufacturing cost is $225 per set, equally divided between materials and labor. Inventory storage cost is $7 per unit per month and is assigned based on the ending inventory level. A shortage of sets results in lost sales and is estimated to cost an overall $22 per unit short.
The inventory on hand at the beginning of the planning period is 225 units. Fourteen labor hours are required per videodisc player. The workday is eight hours. No backorders exist, meaning any unmet demand in one month is not carried over to the next month.
Develop an aggregate production schedule for the year using a constant workforce. For simplicity, assume 23 working days each month except July, when the plant closes down for three weeks' vacation (leaving seven working days). Assume that total annual production capacity is greater than or equal to total annual demand (i.e., compute workforce level based on annual demand and annual capacity).(Leave no cells blank - be certain to enter "0" wherever required. Indicate monthly shortages using a negative ending inventory level. Round up the "number of workers" to the next whole number and round down your monthly "Available production" values to the nearest whole number.)
Shoney Video Concepts produces a line of videodisc players to be linked to personal computers for video games. Videodiscs have much faster access time than tape. With such a computer/video link, the game becomes a very realistic experience. In a simple driving game where the joystick steers the vehicle, for example, rather than seeing computer graphics on the screen, the player is actually viewing a segment of a videodisc shot from a real moving vehicle. Depending on the action of the player (hitting a guard rail, for example), the disc moves virtually instantaneously to that segment and the player becomes part of an actual accident of real vehicles (staged, of course).
Shoney is trying to determine a production plan for the next 12 months. The main criterion for this plan is that the employment level is to be held constant over the period. Shoney is continuing in its R&D efforts to develop new applications and prefers not to cause any adverse feelings with the local workforce. For the same reason, all employees should put in full workweeks, even if this is not the lowest-cost alternative. The forecast for the next 12 months is
Explanation / Answer
Month Forecast Demand No of working days Capacity Unit Produced January 625 23 8280 591 February 825 23 8280 591 March 925 23 8280 591 April 625 23 8280 591 May 425 23 8280 591 June 325 23 8280 591 July 225 7 2520 180 August 225 23 8280 591 September 325 23 8280 591 October 725 23 8280 591 November 825 23 8280 591 December 925 23 8280 591 Total 7000 260 6681 Workforce Required = (Forecast Demand - Opening Inventory) * Labor Hour per unit / Std Hours per day * No of days in a year Opening Inventory 225 Labor hour per unit 14 Workforce Required = (7000 - 225)units * 14 lab hrs / (8hrs/day * 260 days) = 46 labors January February March April May June July August Sept October Nov Dec Total Forecast 625 825 925 625 425 325 225 225 325 725 825 925 7000 Beginning inventory 225 191 0 0 0 166 432 387 753 1019 885 651 4709 Available production 591 591 591 591 591 591 180 591 591 591 591 591 6681 Ending inventory 191 -43 -334 -34 166 432 387 753 1019 885 651 317 4390 Costs @ $225 $94,560 $94,560 $94,560 $94,560 $94,560 $94,560 $28,800 $94,560 $94,560 $94,560 $94,560 $94,560 $1,068,960 Lost sales @ $22 $0 $946 $7,348 $748 $0 $0 $0 $0 $0 $0 $0 $0 $9,042 Inventory @ $7 $1,337 $0 $0 $0 $1,162 $3,024 $2,709 $5,271 $7,133 $6,195 $4,557 $2,219 $30,730 Total $95,897 $95,506 $101,908 $95,308 $95,722 $97,584 $31,509 $99,831 $101,693 $100,755 $99,117 $96,779 $1,111,609 Negative Inventory is shown for calculation purposes, it would be Zero Inventory as it is ideally lost sales.
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