Given situation as of January 1: Number of shifts per work day = 1 Scheduled pro

Question

Given situation as of January 1:

Number of shifts per work day = 1

Scheduled production/8.5 hour shift = __________* cases of 24 cans

Rated speed of production line = 1200 cans per minute

Scheduled number of working days/month = 22

Beginning inventory on Jan 1 = 88,333 cases

Sales forecast for January = 600,000 cases

Sales forecast for February = 580,000 cases

Sales forecast for March = 500,000 cases

* You must calculate the number and fill the blank above.

Using the information given above, answer these questions.

1. What is the projected finished goods inventory at end of March?

2. Will this schedule meet the forecasted demand for each of the 3 months? If not, which month(s) will be short and by how many cases?

3. If we experience 3.7% downtime, what will the March ending inventory be?

4. Do you suggest we change the production schedule? How?

Explanation / Answer

Production capacity per day = (8.5 x 60 x 1200) / 24 = 25500 cases per day

Production capacity per month = 25500 x 22 = 561000 cases

Below is the production schedule. There is no shortage without downtime. However, downtime is inevitable hence we can compensate the shortage due to downtime by overtime.

Without Downtime Month Sales Op. Invt Production Cl. Invt Shortage Jan 600000 88333 561000 49333 No Feb 580000 49333 561000 30333 No Mar 500000 30333 561000 91333 No With Downtime Month Sales Op. Invt Production Cl. Invt Shortage Jan 600000 88333 540243 28576 No Feb 580000 28576 540243 -11181 11181 Mar 500000 -11181 540243 29062 No

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