Problem 13-1 (Static)

Suppose you have been given responsibility for developing the six-month aggregate production plan at Soda Galore, a manufacturer of soft drinks. Your company makes three types of soft drinks: regular, diet, and super-caffeinated. Fortunately, all three types are made using the same production process, and the costs related to switching between the three types are so minimal that they can be ignored. Thus, you can treat your problem as an aggregate planning exercise where the planning unit is cases of soft drinks, regardless of what types of drinks they are.

The S&OP team has developed a forecast of demand for the first six months of the year as shown in Table 13-3. The S&OP team has also provided you with the cost data shown in Table 13-4.

The material cost of a case of soda is the same regardless of whether it is produced in regular time or overtime.

TABLE 13-3 Monthly Demand at Soda Galore

Month	Demand Forecast
January	24,000	cases
February	32,000	cases
March	32,000	cases
April	48,000	cases
May	60,000	cases
June	44,000	cases
Total Demand	240,000	cases
Average Monthly Demand	40,000	cases

TABLE 13-4 Soda Galore Planning Data

Current workforce		8	workers
Average monthly output per worker		4,000	cases per month
Inventory holding cost	$	0.30	per case per month
Regular wage rate	$	20.00	per hour
Regular production hours/month/worker		160	hours
Overtime wage rate	$	30.00	per hour
Hiring cost	$	1,000	per worker
Subcontracting cost	$	1.15	per case
Firing/layoff cost	$	1,500	per worker
Beginning inventory		5,000	(all safety stock)

Assume that employees negotiate an increase in the regular production wage rate to $24 per hour and $36 per hour for overtime. Assume Soda Galore always plans to hold at least 5,000 cases of safety stock to meet unanticipated customer demand. Also assume that hiring and layoff/firing, if necessary, occur at the beginning of the month.

a. Using the planning information and the newly negotiated wage rates, develop a six-month production plan based on level production. (Leave no cells blank - be certain to enter "0" wherever required.)

b. Determine the cost of the level production plan.

c. Using the planning information and the newly negotiated wage rates, develop a six-month production plan based on chase production. For the Overtime or Subcontract Plan, use the lowest monthly demand value to compute the size of the fixed workforce. (Leave no cells blank - be certain to enter "0" wherever required.)

d. Determine the cost of the chase production plan.

e. After much internal discussion, the company decides to maintain a permanent workforce of 8 production workers. Given the same planning information and this new requirement, develop a six-month production plan based on hybrid production. (Leave no cells blank - be certain to enter "0" wherever required.)

f. Determine the cost of the hybrid production plan. Use the overtime cost.

Please help thank you

Level Production Plan Month Demand Regular Production Overtime or Subcontract Production Ending Inventory Workers Required (4,000 cases/worker) Hire Fire layoff Jan. Feb. March April May June Total 0 0 0 0 0 0 Total cost Chase Production Plan : Adjust Workforce Size Regular Demand Overtime or Subcontract Month Production Production Ending Inventory Workers Required (4,000 cases/worker) Hire Fire layoff Jan. Feb. March April May June Total 0 0 0 0 0 0 Overtime or Subcontract Month Demand Regular Production Overtime or Subcontract Production Ending Inventory Workers Required (4,000 cases/worker) Hire Fire layoff Jan. Feb. March April May June Total 0 0 Total cost if workforce size adjusted Total cost if overtime production used Total cost if subcontracting used Hybrid Plan Month Demand Regular Production Overtime or Subcontract Production Ending Inventory Inventory Workers Required (4.000 cases/worker) (4,000 cases/worker) Hire Fire layoff Jan. Feb. March April May June Total 0 Total cost Level Production Plan Month Demand Regular Production Overtime or Subcontract Production Ending Inventory Workers Required (4,000 cases/worker) Hire Fire layoff Jan. Feb. March April May June Total 0 0 0 0 0 0 Total cost Chase Production Plan : Adjust Workforce Size Regular Demand Overtime or Subcontract Month Production Production Ending Inventory Workers Required (4,000 cases/worker) Hire Fire layoff Jan. Feb. March April May June Total 0 0 0 0 0 0 Overtime or Subcontract Month Demand Regular Production Overtime or Subcontract Production Ending Inventory Workers Required (4,000 cases/worker) Hire Fire layoff Jan. Feb. March April May June Total 0 0 Total cost if workforce size adjusted Total cost if overtime production used Total cost if subcontracting used Hybrid Plan Month Demand Regular Production Overtime or Subcontract Production Ending Inventory Inventory Workers Required (4.000 cases/worker) (4,000 cases/worker) Hire Fire layoff Jan. Feb. March April May June Total 0 Total cost