Cut-and-Try Example - JC Company JANUARY DEMAND AND WORKING DAYS FEBRUARY MARCH APRA. MAY Demand forecast Number of working days JUNE TOTALS 1.800 22 1,500 19 1.100 21 900 21 1.100 22 1,600 20 8,000 125 COSTS Materials Inventory holding cost Marginal cost of stockout Marginal cost of subcontracting Hiring and training cost Layoff cost Labor hours required Straight-time cost (first eight hours each day) Overtime cost (time and a half) $100.00/unit $1.50/unit/month $5.00/unit/month $20.00/unit ($120.00 subcontracting cost less $100.00 material savings) $200.00/worker $250.00/worker 5/unit $4.00/hour $6.00/hour INVENTORY 400 units 25% of month demand End That salty shock Beginning inventory Safety stock Bean laut production -Demand 400 January February March April May June Beginning Inventory 400 Demand Forecast 1,800254 1,500 261,100900_354 1,100 1,6002% Safety Stock (25 XOF) 450 375 295 225 275 Production Requirement 11850 1.875 1375 1125 1.375 2000 Ending Inventory 450 375 25 295 275 LIDO Plan Evaluation Example - JC Company Plan 1 Plan 2 Plan 3 Plan 4 Comparison of Four Plans Cost Hiring Layoff Excess inventory Shortage Subconstract Overtime Straight time Total Production Plan 1: Exact Production; Vary Workforce January February March Production Requirement April May June 1.850 1.875 1,375 1.125 1375 2000 Production Hours Required 9250 9,315 6.675 3.625 6,875 19 000 Working Days per Month 22 19 21 21 Hours per Month per Worker 22 70 177 152 169 168 Workers Required 176 160 53 62 ul 33 New Workers Hired 39 63 o o 7 21 Hiring Cost Workers Laid Off 6 13 u 54 Layoff Cost Straight Time Cost Total Cost Total Production Plan 2: Constant Workforce; Vary Inventory and Stockout January February March April May June Beginning Inventory 400 Working Days per Month 19 21 21 22 20 Production Hours Available 22 Actual Production Demand Forecast 1800 1500 1100 900 1100 1600 Ending Inventory Shortage Cost Safety Stock Units Excess Inventory Cost Straight Time Cost Total Cost Cut-and-Try Example - JC Company JANUARY DEMAND AND WORKING DAYS FEBRUARY MARCH APRA. MAY Demand forecast Number of working days JUNE TOTALS 1.800 22 1,500 19 1.100 21 900 21 1.100 22 1,600 20 8,000 125 COSTS Materials Inventory holding cost Marginal cost of stockout Marginal cost of subcontracting Hiring and training cost Layoff cost Labor hours required Straight-time cost (first eight hours each day) Overtime cost (time and a half) $100.00/unit $1.50/unit/month $5.00/unit/month $20.00/unit ($120.00 subcontracting cost less $100.00 material savings) $200.00/worker $250.00/worker 5/unit $4.00/hour $6.00/hour INVENTORY 400 units 25% of month demand End That salty shock Beginning inventory Safety stock Bean laut production -Demand 400 January February March April May June Beginning Inventory 400 Demand Forecast 1,800254 1,500 261,100900_354 1,100 1,6002% Safety Stock (25 XOF) 450 375 295 225 275 Production Requirement 11850 1.875 1375 1125 1.375 2000 Ending Inventory 450 375 25 295 275 LIDO Plan Evaluation Example - JC Company Plan 1 Plan 2 Plan 3 Plan 4 Comparison of Four Plans Cost Hiring Layoff Excess inventory Shortage Subconstract Overtime Straight time Total Production Plan 1: Exact Production; Vary Workforce January February March Production Requirement April May June 1.850 1.875 1,375 1.125 1375 2000 Production Hours Required 9250 9,315 6.675 3.625 6,875 19 000 Working Days per Month 22 19 21 21 Hours per Month per Worker 22 70 177 152 169 168 Workers Required 176 160 53 62 ul 33 New Workers Hired 39 63 o o 7 21 Hiring Cost Workers Laid Off 6 13 u 54 Layoff Cost Straight Time Cost Total Cost Total Production Plan 2: Constant Workforce; Vary Inventory and Stockout January February March April May June Beginning Inventory 400 Working Days per Month 19 21 21 22 20 Production Hours Available 22 Actual Production Demand Forecast 1800 1500 1100 900 1100 1600 Ending Inventory Shortage Cost Safety Stock Units Excess Inventory Cost Straight Time Cost Total Cost
