Question

Cornwell Glass produces replacement automobile glass for all makes of cars. Cornwell has a sophisticated forecasting system that uses data from past years to find seasonal factors and long-term trends. The system uses data from past weeks to find recent trends. The following table presents the forecasted demands for the coming year on a weekly basis.

Week		Demand	Week		Demand
April	15	1,829	November	4	1,864
	22	1,820		11	1,989
	29	1,887		18	2,098
May	6	1,958		25	2,244
	13	2,011	December	2	2,357
	20	2,063		9	2,368
	27	2,104		16	2,387
June	3	2,161		23	2,402
	10	2,258		30	2,418
	17	2,307	January	6	2,417
	24	2,389		13	2,324
July	1	2,434		20	2,204
	8	2,402		27	2,188
	15	2,385	February	3	2,168
	22	2,330		10	2,086
	29	2,323		17	1,954
August	5	2,317		24	1,877
	12	2,222	March	3	1,822
	19	2,134		10	1,803
	26	2,065		17	1,777
September	2	1,973		24	1,799
	9	1,912		31	1,803
	16	1,854	April	7	1,805
	23	1,763
	30	1,699
October	7	1,620
	14	1,689
	21	1,754
	28	1,800

Cornwell uses these forecasts for its production planning. It manufactures several types of glass, and demand is aggregated across products and measured in pounds.

It is obvious from the demands that there is a great deal of seasonality/cyclicality in the demand pattern. Cornwell will need to take this into account in developing a production plan for the coming year.

Cornwell must consider the costs of hiring or firing workers; using overtime; subcontracting; and holding inventory or running out of the product. The holding cost for glass is $.12 per pound per week. The company estimates that the cost of a late order is $20 per pound per week late.

Cornwell currently costs out each hire at $5.63 per pound (based on training costs and production rates per worker). It costs out each fire at $15.73 per pound (based on unemployment compensation and loss of good will). The company currently has the capacity to manufacture 1,900 pounds of glass per week. This capacity cannot be exceeded under any plan. At most, 2,000 pounds can be subcontracted in a given week, and overtime is limited to 250 pounds per week. Glass that is manufactured during overtime costs $8 per pound more than glass manufactured during regular time. Glass that is subcontracted costs $2 more per pound than glass that is produced during overtime.

The current inventory is 73 units, and currently production is working at full capacity, 1,900 units. Cornwell has not been able to determine whether demands not met in the current month can be met later or whether these orders are lost.

DISCUSSION QUESTIONS

Find the production schedule Cornwell should follow under the various assumptions and policies, and detail the differences among these schedules.

I need chase plane, level plan and subcontract plan calculation steps.

Answer 1

Aggregated Demand for each month
Month	Weeks available		Total demand
April	3	1829	5536
		1820
		1887
May	4	1,958	8,136
		2,011
		2,063
		2,104
June	4	2161	9,115
		2258
		2307
		2389
July	5	2434	11874
		2402
		2385
		2330
		2323
August	4	2317	8,738
		2222
		2134
		2065
September	5	1973	9201
		1912
		1854
		1763
		1699
October	4	1620	6,863
		1689
		1754
		1800
November	4	1864	8,195
		1989
		2098
		2244
December	5	2357	11932
		2368
		2387
		2402
		2418
January	4	2417	9,133
		2324
		2204
		2188
February	4	2168	8,085
		2086
		1954
		1877
March	5	1822	9004
		1803
		1777
		1799
		1803
April	1	1805	1805 Aggregated Demand for each month Month Weeks available Total demand April 3 1829 5536 1820 1887 May 4 1,958 8,136 2,011 2,063 2,104 June 4 2161 9,115 2258 2307 2389 July 5 2434 11874 2402 2385 2330 2323 August 4 2317 8,738 2222 2134 2065 September 5 1973 9201 1912 1854 1763 1699 October 4 1620 6,863 1689 1754 1800 November 4 1864 8,195 1989 2098 2244 December 5 2357 11932 2368 2387 2402 2418 January 4 2417 9,133 2324 2204 2188 February 4 2168 8,085 2086 1954 1877 March 5 1822 9004 1803 1777 1799 1803 April 1 1805 1805

Level strategy

Formula in excel

Here I have taken regular cost as $1 to $9 as OT cost and $11 as Subcontracting cost

Multiplied 4 with holding cost for 4 weeks

Chase Strategy