KSK Company produces backpacks. The company's operations manager, Mehmet Akbalcık, would like to try alternative batch production plans using the data below. Costs Labor cost ($/hour) $12.00 Contract cost ($/piece) $90.00 Retention cost ($/unit-month) $10.00 Hiring cost ($/worker) $500.00 Layoff cost ($/employee) $600.00 Capacity data Current number of workers 200 workers Initial inventory (early January) 300 pieces Labor hours required for a product (product/hour) 5 hours Monthly working hours (employees/month) 160 hours Demand forecasts (units) January 4800 February 5200 March 8500 April 6500 May 4500 June 6200 In the light of these data, apply the following 2 alternative plans by creating tables. Indicate which plan should be preferred. a) Adjusting the labor level each month to produce to meet net demand (Demand monitoring strategy). Contract manufacturing will not be used in this plan. b) Production to meet net demand with the current workforce level (constant production rate strategy). In this plan, in case KSK's own production amount is insufficient to meet the demand, contract manufacturing will be used for the missing amount
KSK Company produces backpacks. The company's operations manager, Mehmet Akbalcık, would like to try alternative batch production plans using the data below.
|
Costs |
|
|
Labor cost ($/hour) |
$12.00 |
|
Contract cost ($/piece) |
$90.00 |
|
Retention cost ($/unit-month) |
$10.00 |
|
Hiring cost ($/worker) |
$500.00 |
|
Layoff cost ($/employee) |
$600.00 |
|
Capacity data |
|
|
Current number of workers |
200 workers |
|
Initial inventory (early January) |
300 pieces |
|
Labor hours required for a product (product/hour) |
5 hours |
|
Monthly working hours (employees/month) |
160 hours |
|
Demand |
|
|
January |
4800 |
|
February |
5200 |
|
March |
8500 |
|
April |
6500 |
|
May |
4500 |
|
June |
6200 |
In the light of these data, apply the following 2 alternative plans by creating tables. Indicate which plan should be preferred.
a) Adjusting the labor level each month to produce to meet net demand (Demand monitoring strategy). Contract manufacturing will not be used in this plan.
b) Production to meet net demand with the current workforce level (constant production rate strategy). In this plan, in case KSK's own production amount is insufficient to meet the demand, contract manufacturing will be used for the missing amount
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