14. W. C. Sanders, owner of Fort Engines, a producer of heavy-duty snow blower e

Question

14. W. C. Sanders, owner of Fort Engines, a producer of heavy-duty snow blower engines, needs to develop an aggregate plan for the coming year. The company currently uses 20 individuals working 160 regular-time hours each month. Each worker is capable of produ- cing 10 heavy-duty snow blowers per month. Employ- ees are paid $12 per hour. Overtime is limited to a maximum of 40 hours per month per employee. Hold- ing costs are $5 per unit per period. Back-order cost is $10 per unit per period. The beginning inventory is 40 units. Monthly demand projections are: Month Demand (units) Month January February March 250 230 190 170 200 220 Jul August September October November December Demand (units) 220 220 260 260 240 220 ril ay June (a) Develop a hybrid aggregate plan using the initial workforce supplemented by overtime. If demand in any period exceeds regular-time production plus overtime production plus any beginning will use back orders. inventory, the company Calculate the cost of this plan (b) Another alternative is to try a level plan that uses inventorv and back orders to absorb fluctuation. Calculate the cost of this plan (c) A third alternative being considered is to use a hybrid plan but also to close down the facility for the entire month of July. Overtime, inventory, and back orders can be used. Calculate the cost of this an. (d) Compare the three plans in terms ofcost, customer service, operations, and human resources.

Explanation / Answer

D.

As per the costs we get:

A Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Demand 250 230 190 170 200 220 220 220 260 260 240 220 Begin Inv 40 0 0 10 40 40 20 0 0 -10 -20 -10 Net req 210 230 190 160 160 180 200 220 260 270 260 230 Prod Reg 200 200 200 200 200 200 200 200 200 200 200 200 10 20 Work force 20 20 20 20 20 20 20 20 20 20 20 20 Rate Staff OT units 10 30 0 0 0 0 0 20 50 50 50 30 Max OT Units 50 50 50 50 50 50 50 50 50 50 50 50 Closing Inv 0 0 10 40 40 20 0 0 -10 -20 -10 0 12 Prod Cost 38400 38400 38400 38400 38400 38400 38400 38400 38400 38400 38400 38400 12 OT cost 1920 5760 0 0 0 0 0 3840 9600 9600 9600 5760 5 Inv Cost 0 0 50 200 200 100 0 0 0 0 0 0 10 Backorder cost 0 0 0 0 0 0 0 0 100 200 100 0 Total cost 507830 B Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Demand 250 230 190 170 200 220 220 220 260 260 240 220 Begin Inv 40 10 0 30 80 100 100 100 100 60 20 0 Total Demand Monthly Net req 210 220 190 140 120 120 120 120 160 200 220 220 2680 220 Prod Reg 200 200 200 200 200 200 200 200 200 200 200 200 10 20 Work force 20 20 20 20 20 20 20 20 20 20 20 20 Rate Staff OT units 20 20 20 20 20 20 20 20 20 20 20 20 Max OT Units 50 50 50 50 50 50 50 50 50 50 50 50 Closing Inv 10 0 30 80 100 100 100 100 60 20 0 0 12 Prod Cost 38400 38400 38400 38400 38400 38400 38400 38400 38400 38400 38400 38400 12 OT cost 3840 3840 3840 3840 3840 3840 3840 3840 3840 3840 3840 3840 5 Inv Cost 50 0 150 400 500 500 500 500 0 0 0 0 10 Backorder cost 0 0 0 0 0 0 0 0 0 0 0 0 Total cost 509480 C Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Demand 250 230 190 170 200 220 220 220 260 260 240 220 Begin Inv 40 0 0 60 140 190 220 0 30 20 10 0 Net req 210 230 190 110 60 30 0 220 230 240 230 220 Prod Reg 200 200 200 200 200 200 0 200 200 200 200 200 10 20 Work force 20 20 20 20 20 20 0 20 20 20 20 20 Rate Staff OT units 10 30 50 50 50 50 0 50 50 50 30 20 Max OT Units 50 50 50 50 50 50 50 50 50 50 50 50 Closing Inv 0 0 60 140 190 220 0 30 20 10 0 0 12 Prod Cost 38400 38400 38400 38400 38400 38400 0 38400 38400 38400 38400 38400 12 OT cost 1920 5760 9600 9600 9600 9600 0 9600 9600 9600 5760 3840 5 Inv Cost 0 0 300 700 950 1100 0 150 0 0 0 0 10 Backorder cost 0 0 0 0 0 0 0 0 0 0 0 0 Total cost 510080

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