Assignment:
A company manufacturer needs help planning production for next year. Demand for its main product is expected to be,
|
Month
|
Demand Forecast
|
Month
|
Demand Forecast
|
Month
|
Demand Forecast
|
Month
|
Demand Forecast
|
|
Jan
|
1000
|
Apr
|
2000
|
Jul
|
5000
|
Oct
|
500
|
|
Feb
|
500
|
May
|
3000
|
Aug
|
3000
|
Nov
|
500
|
|
Mar
|
500
|
Jun
|
4000
|
Sep.
|
1000
|
Dec
|
3000
|
Given the following costs and demand forecast, test two strategies for meeting demand: (1) chase strategy with overtime or (2) 3000 units' level production from April through September, subcontracting production during the other months to meet demands. Explain which strategy is the best.
|
Costs and Other Information
|
|
Beginning workforce
|
8 workers
|
Holding cost
|
$0.5 per unit/month
|
|
Subcontracting capacity
|
Unlimited
|
Backordering cost
|
$10 per unit/month
|
|
Production rate per worker
|
250 units/month
|
Subcontracting Cost
|
$30 per unit
|
|
Regular wage rate
|
$15/hour
|
Overtime wage rate
|
$30/hour
|
Provide complete and step by step solution for the question and show calculations and use formulas.