Rowley Apparel, manufacturer of the famous "Race-A-Rama" swimwear line, needs help planning production for next year. Demand for swimwear follows a seasonal pattern, as shown here. Given the following costs and demand forecasts, test these three strategies for meeting demand: (a) level production with overtime and subcontracting, (b) level production with backorders as needed, (c) chase demand. Determine the cost of each strategy. Which strategy would you recommend? Month January February March April May June July August September October November December Demand Forecast 1,000 500 500 2,000 3,000 4,000 5,000 3,000 1,000 500 500 3,000 Beginning workforce 8 workers Subcontracting capacity Unlimited Overtime capacity 2,000 units/month | Production rate per worker | 250 units/month Regular wage rate $15 per unit Overtime wage rate $25 per unit Subcontracting cost $30 per unit Hiring cost $100 per worker Firing cost $200 per worker Holding cost $0.50 per unit Backordering cost $10 per unit/month No beginning inventory Ans.(a) $448,000 (b) $443,250 (c) $367,600. Choose (c). In Problem 1, assume increasing the workforce costs $2,000 per worker, decreasing the workforce costs $3,000 per worker, and backordering is $25 per unit per period. Which strategy is the best now? Note that if you have set up a spreadsheet model for question 1 above this question should only require entering the three new costs. Ans. (a) $448,000 (b) $555,750 (c) $488,000. Choose (a). Rowley Apparel, manufacturer of the famous "Race-A-Rama" swimwear line, needs help planning production for next year. Demand for swimwear follows a seasonal pattern, as shown here. Given the following costs and demand forecasts, test these three strategies for meeting demand: (a) level production with overtime and subcontracting, (b) level production with backorders as needed, (c) chase demand. Determine the cost of each strategy. Which strategy would you recommend? Month January February March April May June July August September October November December Demand Forecast 1,000 500 500 2,000 3,000 4,000 5,000 3,000 1,000 500 500 3,000 Beginning workforce 8 workers Subcontracting capacity Unlimited Overtime capacity 2,000 units/month | Production rate per worker | 250 units/month Regular wage rate $15 per unit Overtime wage rate $25 per unit Subcontracting cost $30 per unit Hiring cost $100 per worker Firing cost $200 per worker Holding cost $0.50 per unit Backordering cost $10 per unit/month No beginning inventory Ans.(a) $448,000 (b) $443,250 (c) $367,600. Choose (c). In Problem 1, assume increasing the workforce costs $2,000 per worker, decreasing the workforce costs $3,000 per worker, and backordering is $25 per unit per period. Which strategy is the best now? Note that if you have set up a spreadsheet model for question 1 above this question should only require entering the three new costs. Ans. (a) $448,000 (b) $555,750 (c) $488,000. Choose (a)
