W. C. Sanders, owner of Fort Engines, a producer of heavy-duty snow blower engines, needs to develop
Question:
W. C. Sanders, owner of Fort Engines, a producer of heavy-duty snow blower engines, needs to develop an aggregate plan for the coming year. The company currently uses 20 individuals working 160 regular-time hours each month. Each worker is capable of producing 10 heavy-duty snow blowers per month. Employees are paid $12 per hour. Overtime is limited to a maximum of 40 hours per month per employee. Holding costs are $5 per unit per period. Back-order cost is $10 per unit per period. The beginning inventory is 40 units. Monthly demand projections are:
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(a) Develop a hybrid aggregate plan using the initial workforce supplemented by overtime. If demand in any period exceeds regular-time production plus overtime production plus any beginning inventory, the company will use back orders. Calculate the cost of this plan.
(b) Another alternative is to try a level plan that uses inventory and back orders to absorb fluctuation. Calculate the cost of this plan.
(c) A third alternative being considered is to use a hybrid plan but also to close down the facility for the entire month of July. Overtime, inventory, and back orders can be used. Calculate the cost of this plan.
(d) Compare the three plans in terms of cost, customer service, operations, and humanresources.
Step by Step Answer:
a A single employee can produce 10 units per month with regular labor Overtime can produce another 25 units per employee Note The net demand reflects ...View the full answer
