Kool King solution

# Kool King solution - Overtime = 0.5 5/hr = \$2.5 person/hr...

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Kool King (A) Analysis 1. Inventory build-up period: September thru March. Artificial demand due to early-order plan. 2. Sales of a/c predominantly April and July. Average Inventory Plant 25169 Field 20650 Total 45819 Inventory carrying cost 45819 * 125.70 * 10% = 550,200 Total Days to make products in fiscal year 1979 = 336 Days available = 230 Three basic options for Kool King a. Second shift b. Overtime c. Second Line Trade-off calculations Hiring cost = \$284 / person 100 people = \$28400
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Unformatted text preview: Overtime = 0.5 * 5/hr = \$2.5/ person/hr 100 persons produce 550 / 8 units /hr. Overtime premium = 2.5*8*100 / 550 = \$3.64/ unit 1) Break-even between shifts / overtime = 28,400 / 3.64 = 8,000 (approx) = 3weeks production approx 2) Break-even between overtime and inventory carrying charges = 3.64 *12 / (125.7 *10) = 3.2 months Build an aggregate plan which builds inventory during the lean season and deploys a second shift when demand gets bigger…. ....
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## This note was uploaded on 03/01/2012 for the course STRATEGY Om121 taught by Professor Abhinavdhar during the Spring '12 term at Harvard.

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