Question

# Suppose you have been given responsibility for developing the six-month aggregate production plan at Soda Galore,...

Suppose you have been given responsibility for developing the six-month aggregate production plan at Soda Galore, a manufacturer of soft drinks. Your company makes three types of soft drinks: regular, diet, and super-caffeinated. Fortunately, all three types are made using the same production process, and the costs related to switching between the three types are so minimal that they can be ignored. Thus, you can treat your problem as an aggregate planning exercise where the planning unit is cases of soft drinks, regardless of what types of drinks they are.

 January 16000 February 24,000 March 32,000 April 32,000 May 60,000 June 88,000 Total Demand 252,000 Average Monthy Demand 42,000
 Current Workforce 10 workers Average Monthly Output per worker 2000 cases per month Inventory holding cost \$0.30 per month Regular Wage rate \$36 per hour Regular production hours/ month/ worker 100 hours Overtime wage rate \$54 per hour Hiring cost \$1000 per worker Firing cost \$1500 per worker Subcontracting cost \$2.90 per case Beginning inventory 7000 (all safety stock)

a)Determine the cost of the chase production plan.

a.1) Total cost is workforce size adjusted

a.2) Total cost if overtime production used

a.3)Total cost if subtracting used

b) After much internal discussion, the company decides to maintain a permanent workforce of 10 production workers. Given the same planning information and this new requirement, develop a six-month production plan based on hybrid production. Determine the cost of the hybrid production plan. Use the overtime cost.

#### Homework Answers

Answer #1

Solution :

Part A.1 : Total cost is workforce size adjusted : 505,200

Part A.2 : Total cost if overtime production used: 586,200

Part A.C : Total cost if subtracting used : 612,600

Part B : Total Cost : 586,200 (Similar to Case A.2)

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