Operations and Supply Chain Management The Core

260 OPERATIONS AND SUPPLY CHAIN MANAGEMENT
The number of production hours available for regular time and overtime is
APRIL MAY JUNE JULY
Regular time
Overtime
1,500
700
1,300
650
1,800
900
2,000
1,000
Set up the problem in a spreadsheet and an optimal solution using the Excel
Solver. Appendix A describes how to use the Excel Solver.
13. Shoney Video Concepts produces a line of video streaming servers that are linked
to computers for storing movies. These devices have very fast access and large
storage capacity.
Shoney is trying to determine a production plan for the next 12 months.
The main criterion for this plan is that the employment level is to be held
constant over the period. Shoney is continuing in its R&D efforts to develop
new applications and prefers not to prompt any adverse feelings from the local
workforce. For the same reason, all employees should put in full workweeks,
even if that is not the lowest-cost alternative. The demand forecast for servers for
the next 12 months is
MONTH FORECAST DEMAND MONTH FORECAST DEMAND
January
February
March
April
May
June
600
800
900
600
400
300
July
August
September
October
November
December
200
200
300
700
800
900
Manufacturing cost is $200 per server, equally divided between materials and
labor. Inventory storage cost is $5 per month. A shortage of servers results in lost
sales and is estimated to cost an overall $20 per unit short.
The inventory on-hand at the beginning of the planning period is 200 units.
Ten labor hours are required per DVD player. The workday is eight hours.
Develop an aggregate production schedule for the year using a constant
workforce. For simplicity, assume 22 working days each month except July,
when the plant closes down for three weeks’ vacation (leaving seven working
days). Assume that total production capacity is greater than or equal to total
demand.
14. Develop a production schedule to produce the exact production requirements by
varying the workforce size for the following problem. Use the example in the
chapter as a guide (Plan 1).
The monthly forecasts for product X for January, February, and March are
1,000, 1,500, and 1,200, respectively. Safety stock policy recommends that half
of the forecast for that month be defined as safety stock. There are 22 working
days in January, 19 in February, and 21 in March. Beginning inventory is
500 units.
Manufacturing cost is $200 per unit, storage cost is $3 per unit per month,
standard pay rate is $6 per hour, overtime rate is $9 per hour, cost of stock-out is
$10 per unit per month, marginal cost of subcontracting is $10 per unit, hiring
and training cost is $200 per worker, layoff cost is $300 per worker, and worker
productivity is 0.1 unit per hour. Assume that you start off with 50 workers and
that they work 8 hours per day.