9 Re-examine the chocolate manufacturers demand shown in Figure11.14. Use this data to explore two alternative plans:
Question:
9 Re-examine the chocolate manufacturer’s demand shown in Figure¦11.14. Use this data to explore two alternative plans:
Plan 1 – Produce at 8.7 tonnes per day for the first 124 days of the year, then increase capacity to 29 tonnes per day by heavy use of overtime, hiring temporary staff and some subcontracting. Then produce at 29 tonnes per day until day 194, after which reduce capacity back to 8.7 tonnes per day for the rest of the year. The costs of changing capacity by such a large amount (the ratio of peak to normal capacity is 3.33:1) are calculated by the company as follows: Cost of changing from 8.7 tonnes/day to 29 tonnes/day = £110,000. Cost of changing from 29 tonnes/day to 8.7 tonnes/day = £60,000.
Plan 2 – Produce at 12.4 tonnes per day for the first 150 days of the year, then increase capacity to 29 tonnes per day by use of overtime and hiring some temporary staff. After which, produce at 29 tonnes per day until day 190, then reduce capacity back to 12.4 tonnes per day for the rest of the year. The costs of changing capacity in this plan are smaller because the degree of change is smaller
(a peak to normal capacity ratio of 2.34:1), and they are calculated by the company as being as follows: Cost of changing from 12.4 tonnes/day to 29 tonnes/day = £35,000. Cost of changing from 29 tonnes/day to 12.4 tonnes/day = £15,000.
Step by Step Answer:
Operations Management
ISBN: 978-1292408248
10th Edition
Authors: Nigel Slack ,Alistair Brandon-Jones ,Nicola Burgess