Operations and Supply Chain Management The Core

256 OPERATIONS AND SUPPLY CHAIN MANAGEMENT
PRODUCTION PLAN 2: CONSTANT WORKFORCE; VARY INVENTORY AND STOCK-OUT
JANUARY FEBRUARY MARCH APRIL MAY JUNE TOTAL
Beginning inventory 200 140 −80 −310 −690 −1150
Working days per month 22 19 21 21 22 20
Production hours available
(Working days per month ×
8 hr./day × 10 workers)* 1,760 1,520 1,680 1,680 1,760 1,600
Actual production (Production
hours available/4 hr./unit) 440 380 420 420 440 400
Demand forecast 500 600 650 800 900 800
Ending inventory (Beginning
inventory + Actual
production − Demand
forecast) 140 −80 −310 −690 −1,150 −1,550
Shortage cost (Units short
× $20) $0 $1,600 $6,200 $13,800 $23,000 $31,000 $75,600
Safety stock 0 0 0 0 0 0
Units excess (Ending
inventory − Safety stock;
only if positive amount) 140 0 0 0 0 0
Inventory cost (Units excess
× $10) $1,400 $0 $0 $0 $0 $0 $1,400
Straight-time cost
(Production hours
available × $12.50) $22,000 $19,000 $21,000 $21,000 $22,000 $20,000 $125,000
*Assume a constant workforce of 10.
Total cost $202,000
PRODUCTION PLAN 3: CONSTANT WORKFORCE; SUBCONTRACT
JANUARY FEBRUARY MARCH APRIL MAY JUNE TOTAL
Production requirement 300 460† 650 800 900 800
Working days per month 22 19 21 21 22 20
Production hours available
(Working days ×
8 hr./day × 10 workers)* 1,760 1,520 1,680 1,680 1,760 1,600
Actual production
(Production hours
available/4 hr./unit) 440 380 420 420 440 400
Units subcontracted
(Production requirements
− Actual production) 0 80 230 380 460 400
Subcontracting cost (Units
subcontracted × $100) $0 $8,000 $23,000 $38,000 $46,000 $40,000 $155,000
Straight-time cost
(Production hours
available × $12.50) $22,000 $19,000 $21,000 $21,000 $22,000 $20,000 $125,000
*Assume a constant workforce of 10.
†600 − 140 units of beginning inventory in February.
Total cost $280,000