Operations Management
Operations Management
13th Edition
ISBN: 9781259667473
Author: William J Stevenson
Publisher: McGraw-Hill Education
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Chapter 11, Problem 2P

A manager would like to know the total cost of a chase strategy that matches the forecast below using a ste.ady regular production rate of 200 units a month, a maximum of 20 units per month of overtime, and subcontracting as needed to make up any shortages. The unit costs are:

Regular production= $35

Overtime = $70

Subcontracting = $80

Chapter 11, Problem 2P, A manager would like to know the total cost of a chase strategy that matches the forecast below

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Southeast Soda​ Pop, Inc., has a new fruit drink for which it has high hopes. John​ Mittenthal, the production​ planner, has assembled the following cost data and demand​ forecast:   demand forecast.                 Quarter Forecast 1 1,900 2 1,200 3 1,600 4 800 ​Costs/Other Data Previous​ quarter's output=1,200 cases Beginning inventory=0 cases Stockout cost of backorders=​$160 per case Inventory holding cost=​$40 per case at end of quarter Hiring employees=​$35 per case Terminating employees=​$80 per case Subcontracting cost=​$65 per case Unit cost on regular time=​$30 per case Overtime cost=​$20 extra per case Capacity on regular time=1,900 cases per quarter John's job is to develop an aggregate plan. The three initial options he wants to evaluate​ are:   • Plan A​: a strategy that hires and fires personnel as necessary to meet the forecast. • Plan B​: a level strategy. • Plan C​: a level strategy that…
Plan production for a four-month period (February through May).   Given information: For February and March, you should produce to exact demand forecast. For April and May, you should use overtime and inventory with a stable workforce; stable means that the number of workersneeded for March will be held constant through May. However, government constraints put a maximum of 5,000 hours of overtime labor per month in April and May (zero overtime in February and March). If demand exceeds supply, then backorders occur. There are 100 workers on January 31. You are given the following demand forecast: February, 80,000; March, 64,000; April, 100,000; May, 40,000. Productivity is four units per worker hour, eight hours per day, 20 days per month. Assume zero inventory on February 1. Costs are hiring, $50 per new worker; layoff, $70 per worker laid off; inventory holding, $10 per unit-month; straight-time labor, $10 per hour; overtime, $15 per hour; backorder, $20 per unit.
Given the following forecast and cost information, Regular time cost $ 40.00 per unitdetermine the total cost of a plan that uses regular time Overtime cost $ 60.00 per unitproduction output of 600 units per month, overtime is subcontracting cost $ 80.00 per unitused when needed up to a maximum of 60 units per holding cost $ 10.00 per unit per monthmonth, and subcontracting is used if additional units are needed to meet the forecast.Month Forecast1 5702 6003 6304 6505 6706 690Totals

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Operations Management

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