General Electric PLC is manufacturer of aviation electrical systems which are used in manufacturing Aero planes. It has a forecast of demand for eighteen months to supply Boeing one of the largest civilian and defence aircraft manufacturer in the world. The company uses 10000 units of component YK monthly. The labour standard per unit is 2.4 and a six hours shift with 6 working days per week. The company maintains 120 permanent workforce.

Task

1.a Assuming that the ordering cost for YK US $250 and holding cost are US $445 calculate the economic order quantity for this component.

b. Calculate how many workers the company would need in the first quarter to match the supply with demand.

2a. Demand is forecasted as follows:

Q1 40000 units

Q2 57000 units

Q3 55000 units

Q4 52000 units

Considering that the company practices level production strategy which is set at 50000 per quarter, demonstrate how the company would be able to supply the market.

Formulae

1. Workers = (Demand per quarter x Labour standard per unit)/

(working days per quarter per worker x Hour per day)

2.EI_t = EI_t-1 + (P_t - D_t)

3 a. Using regression analysis and the data below calculate the forecasts for period 11, 12 and 13.

Year	Annual sales in thousands	Year	Anuual sales in thousands
1	1000	6	2000
2	1300	7	2200
3	2000	8	2600
4	2000	9	2900
5	2000	10	1200

3b. Evaluate how closely related the demand using the data above.

 

Use linear regression analysis formulas.