Having developed a monthly forecast, it is time to look at the production planning process to see how this can be improved. You have gathered the following data.

Month	Forecast for Year 4
January	750
February	830
March	1292
April	1793
May	1967
June	2169
July	2114
August	2044
September	1793
October	1494
November	1073
December	1462

Besta Bikes Inc. operates for 50 weeks of the year, closing down for two weeks in July.

For year four, the months have the following number of weeks:

Month	Number of Weeks	Month	Number of Weeks
January	5	July	2
February	4	August	5
March	4	September	4
April	4	October	5
May	5	November	4
June	4	December	4

Opening Inventory is 750 units and targeted ending inventory is 500 units.

The cost to keep dirt bikes in inventory for one month is $6 which includes the cost of capital, warehouse costs, rework, and risk costs. There is enough storage space for 1200 dirt bikes, after which a public local warehouse is rented at a cost of $3.50 per dirt bike in storage costs. This is in addition to the regular carrying costs of $6. When we cannot meet demand, we pay (stockout cost) the expedited cost for freight as a customer service gesture which is $50 per bike. Note: Unit cost per dirt bike will not be used in this case.

Labor costs for highly skilled employees are $26 per hour plus 26% in benefits. With the different options, the average time to build a dirt bike is 10 hours.

At this point, Besta Bikes has not utilized a second shift, even though they can use a maximum of 100 workers on any given shift. If they were to add a second shift, the hourly rate would increase by 15% for the second shift only.

Each worker works 8 hours, 5 days per week. Overtime is 150% (time and a half) of base wage, with no change in benefit-cost. However, there is an agreement that no more than 8 hours of overtime will be scheduled per week.

The average new employee takes four weeks to reach full productivity level. On average the cost of hiring and training a new employee is $1600. If an employee is ever laid off or let go, the company estimates $2000 to cover layoff notices, paperwork, morale, etc. There are currently 75 experienced workers on staff.

Of the 17,105 bikes sold last year, the records show the following breakdown of parts used.

Part	Part Number	Usage
Frame - 72x29x40	722940	5126
73x30x41	733041	7051
74x31x42	743142	4928
Wheel - 17”	W17	3406
18”	W18	8269
19”	W19	5430
Gear – Alum 17*1.4	GA17	2257
Alum 18*1.4	GA18	7422
Alum 19*1.4	GA19	7426
Trim - Standard	TS01	7469
Deluxe	TD02	9636

Case Analysis Assignment #2

1. Prepare a case analysis for this case. You may use the format from “Evaluations” on Conestoga or the process from Principles of Buying. Focus on the production planning process rather than the demand planning process from Assignment #1.
2. Develop level, chase, and mixed plans on excel for meeting the sales estimates with low cost as a goal. Model must include data tables and visualization(s) to support your analysis. Be sure to include all relevant model variables in the data tables. For the purposes of OPER2045, the visualizations should be included in your word report, referenced in the body and with conclusions to support your analysis. What major problems did you encounter as you developed the data that are worth making the two owners aware of?
3. This business is meant to be an assemble to order and they are building finished goods to keep the workforce busy. Do you have any specific recommendations or areas that could be explored to accomplish the goal of assembling these dirt bikes as orders are received? Hint- think about the production as well as the forecasted demand.
4. What are your overall recommendations to the two owners?