The table below shows the aggregate sales forecasts for a product family for the
ID: 444252 • Letter: T
Question
The table below shows the aggregate sales forecasts for a product family for the year along with the number of working days per month. The forecasts are shown in dollar amounts ($ million). Furthermore, the following assumptions are made:
Average sales value per unit is $30.
Number of units produced per employee per day is 8.
Hiring cost per employee is $200.
Firing cost per employee is $500.
Inventory carrying cost per unit per month is 2%.
Beginning and ending inventories are 115,000 units.
Beginning labor force is 1,437 persons.
Month
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Forecast (in millions $)
7.6
8.4
10.2
9
11.8
7
8.6
12.6
14.4
12.8
15.8
11.8
Working Days/Month
20
21
23
20
22
22
10
23
20
22
20
20
Use a time-phased plan in tabular display to show the forecast in units (1,000 units), the projected number of employees per month, the projected inventory per month in 1,000 units, the projected value of inventory in 1,000 $, and the days of supply per month when a chase strategy is used.
Repeat (a) with a level strategy.
Compare the total cost of the chase strategy versus the level strategy.
Design a hybrid strategy that will cost less than either the chase strategy or the level strategy.
Month
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Forecast (in millions $)
7.6
8.4
10.2
9
11.8
7
8.6
12.6
14.4
12.8
15.8
11.8
Working Days/Month
20
21
23
20
22
22
10
23
20
22
20
20
Explanation / Answer
The relationship between forecasts in value and forecast in units is Value = Price * units.
The projected number of employees per month = Production /( 8 * working days in the month)
Inventory level is based on difference between demand and production and opening inventory
Under the chase strategy hiring and firing of employees is done with the objective to have minimum level of inventory as shown below in the table
Month Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total Forecast (in millions $) 7.6 8.4 10.2 9 11.8 7 8.6 12.6 14.4 12.8 15.8 11.8 Working Days/Month 20 21 23 20 22 22 10 23 20 22 20 20 Forecast (in 000units)2/30 253.333 280 340 300 393.333 233.333 286.666 420 480 426.666 526.666 393.333 Demand 253334 280000 340000 300000 393334 233334 286667 420000 480000 426667 526667 393334 InventoryBeg. 115000 66 122 154 154 4 46 19 91 91 48 101 Prod/worker 160 168 184 160 176 176 80 184 160 176 160 160 ProductionReq 138334 279934 339878 299846 393180 233330 286621 419981 479909 426576 526619 508233 No. Of workers 864.5875 1666.274 1847.163 1874.038 2233.977 1325.739 3582.763 2282.505 2999.431 2423.727 3291.369 3176.456 actual no 865 1667 1848 1875 2234 1326 3583 2283 3000 2424 3292 3176 Actual Prod. 138400 280056 340032 300000 393184 233376 286640 420072 480000 426624 526720 508160 InventoryEnd 66 122 154 154 4 46 19 91 91 48 101 114927 115823 Hiring number 802 181 27 359 0 2257 0 717 0 868 0 5211 Firing number 572 908 1300 576 116 3472 Cost if hiring 0 160400 36200 5400 71800 0 451400 0 143400 0 173600 0 1042200 Cost of Firing 286000 0 0 0 0 454000 0 650000 0 288000 0 58000 1736000 cost of Inventory 34519.8 56.4 82.8 92.4 47.4 15 19.5 33 54.6 41.7 44.7 34508.4 69515.7Related Questions
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