Question
An electronics manufacturer produces two product categories/families: routers' family and switches' family. Consultation with customers has indicated a demand forecast for each family over the
An electronics manufacturer produces two product categories/families: routers' family and switches' family. Consultation with customers has indicated a demand forecast for each family over the next 12 months (in thousands of units) to be as shown in Excel sheet provided. Manufacturing is primarily an assembly operation and capacity is governed by the number of people on the production line. The plant operates 20 days a month, eight hours each day. Production time per aggregate router unit is 20 minutes and production time per aggregate switch unit is 10 minutes of worker time. Each worker is paid $10 per hour with a 50 percent premium for any overtime. The plant currently has 5,700 employees. Overtime is limited to 20 hours per employee per month. The plant currently maintains 100,000 routers and 50,000 switches in inventory and planning should end up with the same inventory levels in hand. The cost of holding a router in inventory is $2 per month and the cost of holding a switch in inventory is $1 per month.Note 1: Since demand is provided in thousands unit, all quantity related parameters and decisionvariables should have the same unit (i.e. thousands unit).Note2: Use (time used for production available production time) to construct the capacity constraint.A. Assuming no backlogs, no subcontracting, no layoffs, and no new hires, what is the optimum production schedule for the manufacturer? What is the annual cost of this schedule? What inventories does the optimal production schedule build? Does this seem reasonable?B. Is there any value for management to negotiate an increase of allowed overtime per employee per month from 20 hours to 40? What variables are affected by this change?C. Reconsider parts (a) and (b) if the manufacturer starts with only 5,500 employees. Reconsider parts (a) and (b) if the manufacturer starts with 6,000 employee. What happens to the value of additional overtime as the workforce size decrease?D. Is there any value for management to negotiate an increase of working hours per day from 8 hours to 9 ? How do inventory and overtime get affected?
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