QUESTION 2 BNM, located in Windsor, is a manufacturer of toys. BNM is in the middle of the demand and supply planning exercise for the coming six months. Anticipated monthly demand from distributors over the 6 months is shown in the following Table. Table - Anticipated Monthly Demand at BNM Month Demand Forecast (in thousands) November 1300 December 1600 January 1200 February 1300 March 1000 April 1150 Capacity at BNM is restricted by the number of workers it hires. Workers are paid $20 per hour for regular time and 530 per hour for overtime. One worker can assemble a toy every 10 minutes. The plant works 20 days a month and 8 hours a day of regular time. Overtime is limited to a maximum of 20 hours per worker per month BNM currently has 1250 workers and prefers not to change that number It costs $3 to carry a toy in inventory for a month. Component costs for each toy total $20. Toys are sold to distributors at a price of S100 each. We assume that no stockouts are allowed and the starting inventory entering November is 50,000 units and the desired ending inventory in April is also 50.000 units. A third party has offered to produce toys as needed at a cost of $26 per unit (this includes component costs of $20 per unit), willinna valec in that the is restricted by the number of workers it hires. Workers are paid $20 per hour for regular time and $30 per hour for overtime. One worker can assemble a toy every 10 minutes. The plant works 20 days a month and 8 hours a day of regular time. Overtim is limited to a maximum of 20 hours per worker per month. BNM currently has 1250 workers and prefers not to change that number It costs $3 to carry a toy in inventory for a month. Component costs for each toy total $20. Toys are sold to distributors at a price of $100 cach. We assume that no stockouts are allowed and the starting inventory entering November is 50,000 units and the desired ending inventory in April is also 50,000 units. A third party has offered to produce toys as needed at a cost of $26 per unit (this includes component costs of $20 per unit) Market research has indicated that a promotion dropping prices by 5 percent in a given month will increase sales in that month by 20 percent and bring forward 10 percent demand from each of the following three months. b. What is the optimal production plan for the six months if we assume no promotions? What is the annual profit from this plan? What is the cost of this plan? c. What is the optimal production plan for the six months if we have a promotion at November? How much difference in profit can be achieved as a result? Browse My Computer for Copyright Cleared File Attach File Browse Content Collection QUESTION 2 BNM, located in Windsor, is a manufacturer of toys. BNM is in the middle of the demand and supply planning exercise for the coming six months. Anticipated monthly demand from distributors over the 6 months is shown in the following Table. Table - Anticipated Monthly Demand at BNM Month Demand Forecast (in thousands) November 1300 December 1600 January 1200 February 1300 March 1000 April 1150 Capacity at BNM is restricted by the number of workers it hires. Workers are paid $20 per hour for regular time and 530 per hour for overtime. One worker can assemble a toy every 10 minutes. The plant works 20 days a month and 8 hours a day of regular time. Overtime is limited to a maximum of 20 hours per worker per month BNM currently has 1250 workers and prefers not to change that number It costs $3 to carry a toy in inventory for a month. Component costs for each toy total $20. Toys are sold to distributors at a price of S100 each. We assume that no stockouts are allowed and the starting inventory entering November is 50,000 units and the desired ending inventory in April is also 50.000 units. A third party has offered to produce toys as needed at a cost of $26 per unit (this includes component costs of $20 per unit), willinna valec in that the is restricted by the number of workers it hires. Workers are paid $20 per hour for regular time and $30 per hour for overtime. One worker can assemble a toy every 10 minutes. The plant works 20 days a month and 8 hours a day of regular time. Overtim is limited to a maximum of 20 hours per worker per month. BNM currently has 1250 workers and prefers not to change that number It costs $3 to carry a toy in inventory for a month. Component costs for each toy total $20. Toys are sold to distributors at a price of $100 cach. We assume that no stockouts are allowed and the starting inventory entering November is 50,000 units and the desired ending inventory in April is also 50,000 units. A third party has offered to produce toys as needed at a cost of $26 per unit (this includes component costs of $20 per unit) Market research has indicated that a promotion dropping prices by 5 percent in a given month will increase sales in that month by 20 percent and bring forward 10 percent demand from each of the following three months. b. What is the optimal production plan for the six months if we assume no promotions? What is the annual profit from this plan? What is the cost of this plan? c. What is the optimal production plan for the six months if we have a promotion at November? How much difference in profit can be achieved as a result? Browse My Computer for Copyright Cleared File Attach File Browse Content Collection
