Capacity Planning Homework AssignmentTo be Submitted

The Baltimore Manufacturing Companys management forecasts demand for each quarter as follows:

	First Quarter	Second Quarter	Third Quarter	Fourth Quarter
Average quarterly demand	7000 units	9000 units	10000 units	8000 units

Assume that Arundel, Inc. started the First Quarter with 20 workers and 2000 units in inventory. The company wishes to finish the year with an inventory of 5000 units on hand. The average pay per worker is $9,000 per quarter, including benefits. Production per worker is 100 units per quarter. If necessary, overtime can be used up to 20% during the two peak demand quarters. Overtime time work, if used, is paid at 150% of regular pay. It costs $900 to hire a new worker and $1,200 to lay off a worker. Inventory carrying cost averages $10 per unit per month.

(A) Using the table below, determine the total cost of using Level strategy.

Resources	Summer	Fall	Winter	Spring	Total
Beg. Inventory
Production
Demand
Ending Inventory
Costs
Regular labor cost
Hiring/firing cost
Inv. Carrying cost
Other costs, if any
Total

.

(B) Using the table below, determine the cost of using the Chase strategy.

Resources	Summer	Fall	Winter	Spring	Total
Beg. Inventory
Production
Demand
Ending Inventory
Costs
Regular labor cost
Hiring/firing cost
Inv. Carrying cost
Other costs, if any
Total

(C) Which strategy do you recommend and why?

For Bonus Points

(D) Management is considering using a mixed strategy. Suppose level strategy plus 10% overtime is used for the two high demand seasons, how many workers will be needed. (You dont need to compute the total costs in this case. Simply determine the number of workers that will be need.