Instructions
Chapter 13
1. The Purse Company produces a line of purses. The manager, Sally Smith, is interested in using a level aggregate plan. Inventories and back orders will be used to handle demand fluctuations. She has asked you to develop such a plan.
Use the following data to solve the first seven problems.
Problem Data
Cost data
Regular-time labor cost per hour $17.00
Overtime labor cost per hour $21.00
Subcontracting cost per unit (labor only) $80.00
Holding cost per unit per period $13.00
Back-order cost per unit per period $20.00
Hiring cost per employee $550.00
Firing cost per employee $400.00
Capacity data
Beginning workforce 300 employees
Beginning inventory 600 units
Labor standard per unit 8 hours
Regular time available per period 200 hours
Overtime available per period 35 hours
Subcontracting maximum per period 1200 units
Subcontracting minimum per period 600 units
Demand data
Period 1 6000 units
Period 2 5000 units
Period 3 8000 units
Period 4 6000 units
Period 5 7000 units
Period 6 5000 units
a. Calculate the aggregate production rate.
b. Calculate the appropriate workforce given the aggregate production rate. If Sally will need to hire workers, include this.
c. Show what would happen if this plan were implemented.
D. Evaluate the plan in terms of cost, customer service, operations, and human resources
2. Sally has decided that the Purse Company must have very good customer service. She has asked you to develop a level aggregate plan using inventories but not back orders. All demand must be met each period. You must:
a. Calculate the aggregate production rate.
b. Calculate the appropriate workforce given the aggregate production rate.
c. Show what would happen if this plan were implemented.
d. Calculate the costs of this plan.
e. Evaluate the plan in terms of cost, customer service, operations, and human resources.
Chapter 14
1. Courtney’s Culotte Pants (CCP) top product is its Model A. Using the information given, draw the product structure tree for the Model A.
Component Immediate Parent Usage per Parent Lead Time (weeks) Beginning Inventory
A none -- 1 0
B A 2 2 250
C A 1 6 500
D A 3 3 750
E A 2 2 750
F B 4 2 3000
G B 2 4 1000
H D 3 2 5000
I D 2 4 5000
J E 1 8 1000
K E 5 1 5000
L E 2 4 2500
M F 3 3 250
N F 6 3 2560
O H 2 4 0
P K 1 2 500
Q K 2 3 1000
2. Using the information given, calculate the replenishment time when no beginning inventory exists
3. Courtney is preparing for her busy season and is building 2500 Model A culotte pants. Calculate the gross requirements for each component assuming that there is no beginning inventory.
4. Using the information given and assuming that 2500 Model A culotte pants are scheduled for completion, calculate the gross requirements of each component. Use the beginning inventories given.
Level Aggregate Plan with Inventories and Backorders
a. Calculate the aggregate production rate.
The aggregate production rate is the average demand over the planning horizon. In this case, the average demand is 6000 units.
b. Calculate the appropriate workforce given the aggregate production rate.
The appropriate workforce is the number of workers needed to produce the aggregate production rate. In this case, the appropriate workforce is 750 workers.
c. Show what would happen if this plan were implemented.
If this plan were implemented, the Purse Company would produce 6000 units each period. They would use inventories to handle any fluctuations in demand. If demand is higher than 6000 units in a period, they would use inventory to meet the demand. If demand is lower than 6000 units in a period, they would build up inventory.
d. Evaluate the plan in terms of cost, customer service, operations, and human resources.
This plan would have a high cost in terms of inventory. The Purse Company would need to hold a lot of inventory in order to meet demand in all periods. This would also require a lot of space to store the inventory.
This plan would have good customer service. The Purse Company would be able to meet all demand, even if it fluctuates from period to period. This would make customers happy and would help to increase sales.
This plan would be easy to operate. The Purse Company would simply produce 6000 units each period and use inventory to handle any fluctuations in demand. This would not require a lot of complex planning or coordination.
This plan would be relatively low in terms of human resources. The Purse Company would only need to hire 750 workers, which is a relatively small number for a company of this size.
2. Level Aggregate Plan with Inventories but No Backorders
a. Calculate the aggregate production rate.
The aggregate production rate is still the average demand over the planning horizon, which is 6000 units.
b. Calculate the appropriate workforce given the aggregate production rate.
The appropriate workforce is still 750 workers.
c. Show what would happen if this plan were implemented.
If this plan were implemented, the Purse Company would produce 6000 units each period. They would use inventories to handle any fluctuations in demand. However, if demand is higher than 6000 units in a period, the Purse Company would have to turn away customers. This would lead to lost sales and customer dissatisfaction.
d. Calculate the costs of this plan.
The costs of this plan would be higher than the costs of the first plan. The Purse Company would have to pay for the cost of lost sales and customer dissatisfaction. They would also have to pay for the cost of holding more inventory.
e. Evaluate the plan in terms of cost, customer service, operations, and human resources.
This plan would have a higher cost in terms of cost, customer service, and operations. The Purse Company would have to pay for lost sales and customer dissatisfaction. They would also have to pay for the cost of holding more inventory. This would make the plan less attractive than the first plan.
However, this plan would be better in terms of human resources. The Purse Company would only need to hire 750 workers, which is a relatively small number for a company of this size. This would make the plan easier to implement and manage.
In conclusion, the level aggregate plan with inventories but no backorders is not as good as the level aggregate plan with inventories and backorders. The first plan has a lower cost and provides better customer service. However, the second plan is easier to implement and manage. The best plan for The Purse Company will depend on their specific needs and constraints.