Problem 4-19 (Algorithmic)

The Silver Star Bicycle Company will be manufacturing both mens and womens models of its Easy-Pedal 10-speed bicycles during the next two months. Management wants to develop a production schedule indicating how many bicycles of each model should be produced in each month. Current demand forecasts call for 150 mens and 125 womens models to be shipped during the first month and 220 mens and 170 womens models to be shipped during the second month. Additional data are shown:

	Production	Labor Requirements (hours)		Current
Model	Costs	Manufacturing	Assembly	Inventory
Men's	$120	2.2	1.3	20
Women's	$90	1.5	1.1	30

Last month the company used a total of 1000 hours of labor. The companys labor relations policy will not allow the combined total hours of labor (manufacturing plus assembly) to increase or decrease by more than 100 hours from month to month. In addition, the company charges monthly inventory at the rate of 2% of the production cost based on the inventory levels at the end of the month. The company would like to have at least 25 units of each model in inventory at the end of the two months.

1. Establish a production schedule that minimizes production and inventory costs and satisfies the labor-smoothing, demand, and inventory requirements. What inventories will be maintained, and what are the monthly labor requirements? If required, round your answers to the nearest whole number. Production schedule: The optimal solution is to produce ______ of the men's model in month 1, _________ of the men's model in month 2, _______ units of the women's model in month 1, and _____ of the women's model in month 2. Total Cost = $ ________

   Inventory Schedule
   Month 1	____Men's	_____Women's
   Month 2	_____Men's	_____Women's

   Labor Levels
   Previous month	___ hours
   Month 1	______hours
   Month 2	_____hours

2. If the company changed the constraints so that monthly labor increases and decreases could not exceed 50 hours, what would happen to the production schedule? If required, round your answers to the nearest whole number. Production schedule: The optimal solution is to produce ____of the men's model in month 1, ________ of the men's model in month 2, ________ units of the women's model in month 1, and ______ of the women's model in month 2. Total Cost = $ ______ How much will the cost increase? $ ______ What would you recommend?

__________