Planners for a company that makes several models of skateboards are about to pre
ID: 2496748 • Letter: P
Question
Planners for a company that makes several models of skateboards are about to prepare the aggregate plan that will cover six periods. They have assembled the following information:
They now want to evaluate a plan that calls for a steady rate of regular-time output, mainly using inventory to absorb the uneven demand but allowing some backlog. Overtime and subcontracting are not used because they want steady output. They intend to start with zero inventory on hand in the first period. Assume a level output rate of 300 units (skateboards) per period with regular time (i.e., 1,800/6 = 300). Note that the planned ending inventory is zero. There are 15 workers, and each can produce 20 skateboards per period.
Suppose that the regular output rate will drop to 290 units per period due to an expected change in production requirements. Costs will not change. Prepare an aggregate plan and compute its total cost for each of these alternatives:
Use overtime at a fixed rate of 20 units per period as needed. Plan for an ending inventory of zero for period 6. Backlogs cannot exceed 90 units per period. (Negative amounts should be indicated by a minus sign. Leave no cells blank - be certain to enter "0" wherever required. Omit the "$" sign in your response.)
Use subcontracting at a maximum rate of 50 units per period; the usage need not be the same in every period. Have an ending inventory of zero in the last period. Again backlogs cannot exceed 90 units in any period. (Negative amounts should be indicated by a minus sign. Leave no cells blank - be certain to enter "0" wherever required. Omit the "$" sign in your response.)
Planners for a company that makes several models of skateboards are about to prepare the aggregate plan that will cover six periods. They have assembled the following information:
Explanation / Answer
a)
b-1)
second plan is better as the overall cost is lesser than the first plan.
Period 1 2 3 4 5 6 Total Forecast 200 200 300 400 500 200 1,800 Output Regular 290 290 290 290 290 290 1740 Overtime 20 20 20 0 0 0 60 Output- Forecast Inventory Beginning 0 110 220 230 120 0 Ending 110 220 230 120 0 0 Average 55 165 225 175 60 0 Backlog 0 0 0 0 90 0 Costs: Regular -7 2,030 2,030 2,030 2,030 2,030 2,030 12,180 Overtime -2 40 40 40 - - - Inventory -1 55 165 225 175 60 - 680 Backorder -8 - - - - 720 - 720 Total 2,125 2,235 2,295 2,205 2,810 2,030 13,580