Question

Period | Forecast |

1 | 200 |

2 | 500 |

3 | 300 |

4 | 400 |

5 | 200 |

6 |
200 |

Regular time: $20 per unit (maximum of 280 units per period)

Overtime: $30 per unit (maximum of 40 units per period)

Subcontracting: Not available

Beginning inventory: None

Carrying cost: $10 per unit per period

Backorder cost: $50 per unit per period

**What is the
first period in which overtime should be scheduled in order to
minimize total cost for the aggregate plan?**

Answer #1

Forecast in period 1 = 200 units

Production in regular time = $20 per unit

Overtime production cost = $30 per unit

Carrying cost = $10 per unit

Back order cost = $50 per unit

**Closing inventory = 80 units (regular time + 40 units
(overtime)**

**=120 units**

**As cost of closing inventory for overtime period =
overtime production cost per unit + carrying cost**

**= $30+$10 = $40 which is less than back order cost which
is $50 per unit if order is not fulfilled.**

As per forecast period 2 requirement is 500 units which can't be
fulfilled in that period itself. **Hence production overtime
should e scheduled from very period 1 so that cost can be minimized
for period 2.**

Forecast in period 2 : 500 units

Production in regular time = 280 units

Overtime production = 40 units

Remaining units = 500-320 units = 180 units

Opening stock from period 1= 120 units (including overtime production units )

Orders not fulfilled = 60 units.

Due to **overtime production in period 1 cost
saving** is = 40 units * ($50-$40) =
**$400**

**Hence overtime should be scheduled from period
1.**

Given the projected demands for the next six months, prepare an
aggregate plan that uses inventory, regular time and overtime,
subcontracting and backorders. The plan must wind up with
no units in ending inventory in Period 6. Regular time
capacity is 150 units per month. Overtime capacity and
subcontracting capacity are 20 units per month each. Overtime cost
is $30 per unit, subcontracting cost is 40 per unit, and backorder
cost is $20 per unit, inventory holding cost is $5...

#2 Given the following forecast and steady regular output of 550
every month, what total cost would result if overtime is limited to
a maximum of 50 units a month, and subcontracting is limited to a
maximum of 10 units a month? Unit costs are:
Regular output $20
Overtime $30
Subcontract $25
Average Inventory $10
Backlog $18
Month 1 2
3
4
5 6
Forecast
540 540 570 590
600 580

Capacity data
Beginning workforce 210 employees
210 employees
Beginning inventory 400 units
400 units
Labor standard per unit 6 hours
6 hours
Regular time available per period 160 hours
160 hours
Overtime available per period 32 hours
32 hours
Subcontracting maximum per period 1000 units
1000 units
Subcontracting minimum per period 500 units
500 units
Demand data
Period 1
6000 units
Period 2
4800 units
Period 3
7840 units
Period 4
5200 units
Period 5
6500 units
Period 6
3600...

Kindly, explaining is needed via solving it manually and in
excel :
Solve this Aggregate Planning Problem by minimizing the cost of
mathcing the capacity vaious options in various periods to the
future demand?
Find inventory cost, regular time cost, overtime cosr and
subcontract cost, and the total cost?
Sales Period
Mar
Apr
May
Demand
700
700
1100
Capacity:
Regular Time
700
700
700
OverTime
100
100
100
Subcontracting
200
200
100
Begening inventory is zero
0
Cost
Regular Time...

Management
Instructions
- Ending inventory
target for Period
5
- Backorder
maximum if possible (after the first
period)
32 Regular shift production per
employee per
period
The company's production strategy keeps the regular shift fully
utilized
100 Maximum overtime production per period if
needed
Use Overtime before
Subcontractors
35 Maximum subcontractor production
per period if
needed
42 Initial
inventory
Aggregate
Plan
1
2
3 ...

Consider the following requirements for a certain product.
Period
1
2
3
4
5
6
7
8
Gross requirements
0
200
200
500
0
400
0
400
Beginning inventory = 500 units
Setup cost = $500 per setup
Lead time = 1 week
Holding cost = $3 per unit per week
a. Develop the lot-for-lot MRP table.
b. Calculate the total relevant costs.
Answer:
Period
1
2
3
4
5
6
7
8
Gross requirements
0
200
200
500
0...

Week 4 Exercise (Sales & Operations planning) – for
3% of the total grade
A small company produces a variety of recreational and leisure
vehicles. The sales & marketing manager has developed the
following aggregate forecasts:
Month
Mar
Apr
May
Jun
Jul
Aug
Sep
Forecast
50
44
55
80
70
40
50
Use the following information:
Regular labor
cost
$240 per unit
Overtime labor
cost
$360 per unit
Subcontracting
cost
$400 per unit
Regular
capacity
50 units per month
Overtime...

Develop a production plan and calculate the annual cost for a
firm whose demand forecast is fall, 10,000; winter, 8,000; spring,
7,000; summer, 12,000. Inventory at the beginning of fall is 500
units. At the beginning of fall, you have 30 workers. It is not
possible to hire any additional workers until next Summer, at which
time temporary workers will be hired at the beginning of Summer and
laid off at the end of Summer. Therefore, no hiring or laying...

Flag Bike components manufactures bicycle wheels and had just
received their forecasts for the next 6 months. Currently, flag
bike employs 15 full time, highly skilled employees, each of whom
can produce 100 wheels per month. There are 300 wheels in beginning
inventory and at present, flag bikes’s customers will tolerate
backorders of up to 200 units per month. The associated costs are
$4 per unit for regular time and 7.50 per unit for overtime.
Inventory holding costs are $3...

Management
Instructions
- Ending inventory
target for Period
5
- Backorder
maximum if possible (after the first
period)
Regular shift production per employee per
period
The company's production strategy keeps the regular shift fully
utilized
40 Maximum overtime production per
period if
needed
Use Overtime before
Subcontractors
10 Maximum subcontractor production
per period if
needed
32 Initial
inventory
Aggregate
Plan
1
2
3
4 ...

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