The Cramer Computer Company has the following projected demand for the next 6 months: There are currently
Question:
The Cramer Computer Company has the following projected demand for the next 6 months:
There are currently 100 workers, each working a normal 8-hour shift, 5 days a week. They can work an extra 10 hours a week in overtime, but it costs the company an extra $10 per hour in overtime costs. One of the computers takes 5 hours of worker time to produce. They can hire more workers at a cost of $3,000, with an additional cost of $5,000 if they layoff a worker. The company has a policy of not allowing shortages, but they are allowed inventory. Inventory costs $15 per month per unit based on average inventory levels for the month. There are no subcontractors for the units. There is a starting inventory of 60 units. Even though they have the "no shortage" policy, if one does happen to occur they charge $150 per unit due to lost profit.
Space will only allow them to have 110 workers. If they need more, they need to start a second shift. To do so increases the cost per worker by $1.50 per hour for a shift premium. A second shift also requires hiring support personnel (a supervisor, maintenance person, and material handler) at an additional cost of $20,000 per month.
Given all these conditions, find a satisfactory solution to help them minimize cost. (Hint: Do not look for an optimal solution. Instead try to set up the problem on a spreadsheet and look for patterns toward a good solution.)
Step by Step Answer:
The Fundamentals Of Production Planning And Control
ISBN: 978-0130176158
1st Edition
Authors: Stephen Chapman