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Dwayne Cole, owner of Florida firm that manufactures display cabinets, develops an 8-month aggregate plan. Demand and capacity (in units) are forecast as follows: Сарacity Jan Feb Mar Apr Мay Jun Jul Aug Source (Units) Regular 235 255 290 300 300 290 300 290 Time Overtime 20 24 26 24 30 28 30 30 Subcontract| 12 16 15 17 17 19 19 20 Demand 255 294 321 301 330 320 345 340 The cost of production each unit is $1000 on regular time, $1300 on overtime, and $1800 on a subcontract. Inventory carrying cost is $200 per unit per month. There is no beginning or ending inventory in stock, and no backorders are permitted from period to period. Let the production workforce vary by using regular time first, then overtime and then subcontracting. a) Set up a production plan that minimizes cost by producing exactly what the demand in each month. This plan allows no backorders or inventory. What is this plan's cost? b) Through better planning, regular time production can be set at exactly the same amount, 275 units, per month. If demand cannot be met, there is no cost assigned to shortages and they will not be filled. Does this alter the solution? c) If overtime costs per unit rise from $1300 to $1400, will your answer to part a) change? What if overtime costs then fall to $1200?

Dwayne Cole, owner of Florida firm that manufactures display cabinets, develops an 8-month aggregate plan. Demand and capacity (in units) are forecast as follows: Сарacity Jan Feb Mar Apr Мay Jun Jul Aug Source (Units) Regular 235 255 290 300 300 290 300 290 Time Overtime 20 24 26 24 30 28 30 30 Subcontract| 12 16 15 17 17 19 19 20 Demand 255 294 321 301 330 320 345 340 The cost of production each unit is $1000 on regular time, $1300 on overtime, and $1800 on a subcontract. Inventory carrying cost is $200 per unit per month. There is no beginning or ending inventory in stock, and no backorders are permitted from period to period. Let the production workforce vary by using regular time first, then overtime and then subcontracting. a) Set up a production plan that minimizes cost by producing exactly what the demand in each month. This plan allows no backorders or inventory. What is this plan's cost? b) Through better planning, regular time production can be set at exactly the same amount, 275 units, per month. If demand cannot be met, there is no cost assigned to shortages and they will not be filled. Does this alter the solution? c) If overtime costs per unit rise from $1300 to $1400, will your answer to part a) change? What if overtime costs then fall to $1200?

Practical Management Science
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter9: Decision Making Under Uncertainty
Section: Chapter Questions
Problem 46P
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Dwayne Cole, owner of Florida firm that manufactures display cabinets, develops an 8-month aggregate plan. Demand and capacity (in units) are forecast as follows: Сараcity Jan Feb Mar Apr Маy Jun Jul Aug Source (Units) Regular 235 255 290 300 300 290 300 290 Time 30 19 Overtime 20 Subcontract 12 24 26 24 30 28 30 16 15 17 17 19 20 Demand 255 294 321 301 330 320 345 340 The cost of production each unit is $1000 on regular time, $1300 on overtime, and $1800 on a subcontract. Inventory carrying cost is $200 per unit per month. There is no beginning or ending inventory in stock, and no backorders are permitted from period to period. Let the production workforce vary by using regular time first, then overtime and then subcontracting. a) Set up a production plan that minimizes cost by producing exactly what the demand in each month. This plan allows no backorders or inventory. What is this plan's cost? b) Through better planning, regular time production can be set at exactly the same amount, 275 units, per month. If demand cannot be met, there is no cost assigned to shortages and they will not be filled. Does this alter the solution? c) If overtime costs per unit rise from $1300 to $1400, will your answer to part a) change? What if overtime costs then fall to $1200?
Transcribed Image Text:Dwayne Cole, owner of Florida firm that manufactures display cabinets, develops an 8-month aggregate plan. Demand and capacity (in units) are forecast as follows: Сараcity Jan Feb Mar Apr Маy Jun Jul Aug Source (Units) Regular 235 255 290 300 300 290 300 290 Time 30 19 Overtime 20 Subcontract 12 24 26 24 30 28 30 16 15 17 17 19 20 Demand 255 294 321 301 330 320 345 340 The cost of production each unit is $1000 on regular time, $1300 on overtime, and $1800 on a subcontract. Inventory carrying cost is $200 per unit per month. There is no beginning or ending inventory in stock, and no backorders are permitted from period to period. Let the production workforce vary by using regular time first, then overtime and then subcontracting. a) Set up a production plan that minimizes cost by producing exactly what the demand in each month. This plan allows no backorders or inventory. What is this plan's cost? b) Through better planning, regular time production can be set at exactly the same amount, 275 units, per month. If demand cannot be met, there is no cost assigned to shortages and they will not be filled. Does this alter the solution? c) If overtime costs per unit rise from $1300 to $1400, will your answer to part a) change? What if overtime costs then fall to $1200?
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