T.C. Leblanc, director of the company Green Machinery, a manufacturer of lawn mowers and leaf blowers / vacuum cleaners. He must prepare a global production plan according to forecast demand for engines (see table below). Month Forecast

January 500

February 300

March 200

April 1000

May 2000

June 3000

July 4000

August 2000

September 500

October 400

November 300

December 2800

Number of employees: 9 employees

Production per day: 9 units per employee

Regular production cost: $ 60 per unit

Cost of subcontracting: $ 85 per unit

Hiring: $ 4,000 per employee

Dismissal: $ 7,000 per employee

Storage cost: $ 2 per unit per month (the monthly inventory cost is calculated based on the final inventory of the month).

Initial stocks: 400 units

We suppose that : Employees work every day of the year (ie 365 days a year). Orders due to backlogs or shortages are not allowed. The monthly inventory cost is calculated based on the final inventory for the month. A safety stock of 10% of your forecast is absolutely essential (final inventory).

a) Develop a synchronous production strategy that respects the forecasts and the safety stock of each month, by varying only the level of manpower by contracts with variable duration. Calculate the total cost of your synchronous plan.

N.B. to calculate the number of employees required for the monthly production, you must absolutely round your result to the next whole value. This means that if you need 16.4 employees for your monthly production, you hire 17 employees for production for 16.4 employees. You pay for 17 employees and 0.6 employees will not be used, but will be paid anyway.

b) Compare costs to a leveled production plan that uses inventory and sub-contracting to absorb fluctuations. Calculate the cost of your plan.

N.B. since the employees work every day of the year, the quantity to be produced each month will vary from month to month. For example, the month of February has 28 days while the month of January has 31. Therefore, you must use a leveled production per day to calculate the production by month. In the examples presented in the course notes, it is assumed that the employees work the same number of days per month, and therefore produce the same quantity per month.

N.B. A safety stock of 10% of your forecast is absolutely essential for your final inventory. You can have a final inventory above the safety stock, but you can never have a final inventory below the requested safety stock. This means that you must absolutely use subcontracting to allow you to satisfy a 10% safety stock.

c) Which of these two plans do you recommend? Justify your answer.