4266690-DMFD-3513-CH7-Aggregate-Capacity-Planning-R

2 production rate per working day planning example 3

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: 22 22 Production = Expected Demand 18 21 21 22 20 Planning Example 3 Basic Production Cost (demand x Prod 1.6 hrs/unit x cost per unit ) Rate $5/hr Cost Information Inventory carrying cost $ 5 per unit per month Inventory carrying cost Daily Subcontracting cost per unit $10 per unit Forecast Subcontracting Month (units) $ 5 per hour ($40 per day) ($40 Average pay rate $ 7 per hour (above 8 hours per day) 1.6 hours per unit Overtime pay rate Labor-hours to produce a unit LaborCost of increasing daily production rate (hiring and training) Cost of decreasing daily production rate (layoffs) $300 per unit $600 per unit Jan 900 Average pay rate 41 $ 7,200 — Feb Overtime 700 rate39 pay 5,600 — Mar 38 6,400 Labor-hours to produce a unit Labor- 800 — June 1,100 Table 13.3 Comparison of Three Plans Cost Plan 1 Plan 2 Inventory carrying $ 9,250 $ Regular labor 49,600 37,696 49,600 0 0 0 0 Extra Cost of Extra Cost of $ unit per Increasing 5 perDecreasing month Production Production $10 per unitcost) Total Cost (hiring cost) (layoff $ 5 per hour ($40 per day) — ($40 $ 7,200 $1,200 $ 7 per hour 6,800 (= x $600) (above28 hours per day) $600 7,000 1.6 hours x $600) (= 1 per unit $5,700$300 per unit Cost of increasing daily production rate Apr 1,200 57 9,600 — (= 19 x $300) (hiring and training) $3,300 May 1,500 68 12,000 — Cost of decreasing daily production (= 11 x $300) per unit rate $600 (layoffs) Table 13.3 Plan 3 $ 0 Hiring 0 0 9,000 Layoffs 0 0 9,600 Subcontracting 0 0 0 $58,850 $52,576 $68,200 Total cost = Number of working days Planning Example 3 Cost Information Overtime labor = Month 55 8,800 $49,600 — $7,800 (= 13 x $600) 16,600 $9,000 $9,600 $68,200 Mathematical Approaches Useful for generating strategies Useful Transportation Method of Linear Transportation Programming Produces an optimal plan Produces Management Coefficients Model Management Model built around manager’s Model manager’ experience and performance Other Models Other Linear Decision Rule Linear Plan 2 is the lowest cost option Table 13.5 15,300 15,300 Simulation Simulation Transportation Method Transportation Demand Capacity: Regular Overtime Subcontracting Beginning inventory Costs Costs Regular time Overtime Subcontracting Carrying Mar 800 Sales Pe...
View Full Document

Ask a homework question - tutors are online