will receive zero Situation: A small company in Bayamon manufactures small solar power fans. Its six-month aggregate planning is crafted using the cut-and-try approach. The following information was available for the next six months. Demand and working days December January February March April May Forecasted demand 2,500 2,200 1,900 1,750 1,950 2,600 Number of working days 19 22 19 21 20 21 Inventory Beginning inventory 225 units Safety stock 10%/month demand Relevant costs/information Total material cost $45.00 Inventory holding cost $2.00 Marginal cost of subcontracting $50.00 Hiring and training cost $800.00 Layoff cost $2,200.00 Straight time cost $6.00 Labor hours required 8/unit Company policy specifies that all S&OP initiatives must be one of the following options/plans to meet customer requirements and comply with the operations strategy plan: a) Manufacture to exact monthly production requirements by varying workforce size: A pure chase strategy, b) Manufacture to meet the minimum expected demand using a constant workforce on regular time, and subcontract to meet additional output requirements: A mix level strategy, c) Manufacture to meet expected demand for all but the first four months using a constant workforce on regular time. Use overtime to meet additional output requirements. Problems: 1. Based on the textbook and using MS Excel, examine and thoroughly explain which option/plan has the lowest total cost. Use screenshots of the Excel models in your explanation. 2. Based on your optimization modeling knowledge of the course ADMI6510, explain how to build an optimization model on Solver that could help you decide on a plan to optimize total cost. (Note: You do not have to build the model. Instead, explain what the decision variables are, show - explain - some constraints, the objective function, and anything else you deemed necessary.) will receive zero Situation: A small company in Bayamon manufactures small solar power fans. Its six-month aggregate planning is crafted using the cut-and-try approach. The following information was available for the next six months. Demand and working days December January February March April May Forecasted demand 2,500 2,200 1,900 1,750 1,950 2,600 Number of working days 19 22 19 21 20 21 Inventory Beginning inventory 225 units Safety stock 10%/month demand Relevant costs/information Total material cost $45.00 Inventory holding cost $2.00 Marginal cost of subcontracting $50.00 Hiring and training cost $800.00 Layoff cost $2,200.00 Straight time cost $6.00 Labor hours required 8/unit Company policy specifies that all S&OP initiatives must be one of the following options/plans to meet customer requirements and comply with the operations strategy plan: a) Manufacture to exact monthly production requirements by varying workforce size: A pure chase strategy, b) Manufacture to meet the minimum expected demand using a constant workforce on regular time, and subcontract to meet additional output requirements: A mix level strategy, c) Manufacture to meet expected demand for all but the first four months using a constant workforce on regular time. Use overtime to meet additional output requirements. Problems: 1. Based on the textbook and using MS Excel, examine and thoroughly explain which option/plan has the lowest total cost. Use screenshots of the Excel models in your explanation. 2. Based on your optimization modeling knowledge of the course ADMI6510, explain how to build an optimization model on Solver that could help you decide on a plan to optimize total cost. (Note: You do not have to build the model. Instead, explain what the decision variables are, show - explain - some constraints, the objective function, and anything else you deemed necessary.)
