Assignment:
1. You are assigned to develop an aggregate plan for More Cowbells. Because More Cowbells is a new company, management does not have any established cost of holding inventory; thus, you must decide this on your own. List at least three sources of inventory holding cost that More Cowbells should consider.
2. Bulldog Computer makes high end customized computers for Bulldog fans. To ensure good customer service, they always plan to have enough capacity to meet demand in every period (i.e., they plan for no stockouts in any period). They are considering a change from a chase strategy (i.e., seeking to capacity with demand in every period) to a level strategy (workforce remains constant throughout the planning period).
a. If they make this change will the total hiring/layoff cost likely increase, decrease, or stay the same? Explain why.
b. If they make this change will the total inventory cost likely increase, decrease, or stay the same? Explain why.
3. FedEx Express is a company that ships parcels (packages) of various size with a guarantee that the package will arrive one day after you send it. Their demand is very seasonal, with extreme peaks occurring around the holidays. Most of the packages shipped to or from the United States pass through the Super Hub in Memphis, TN. A majority of the workforce consists of package handlers, a position that is considered lowskilled. Recommend to FedEx whether a chase or level strategy would be best for doing an aggregate plan for the Memphis Super Hub and list at least two reasons for your recommendation.
4. The personnel department of the AM Corporation wants to know how many workers will be needed each month for the next six-month production period. The following is a monthly demand forecast for the six-month period. Month Forecast July 1250 August 1100 September 950 October 900 November 1000 December 1150 The inventory at the end of June was 500 units. The company wants to have 400 units at the end of December. Each unit requires five employee-hours to produce, there are 20 working days each month, and each employee works an eight-hour day. The workforce at the end of June was 35 workers.
a. Determine the minimum inventory production plan that meets demand (i.e. the chase strategy). (Hint: you might need to round down a fractional number of workers in order to minimize inventory.) Your answer should list the following for each month: number of workers, the production level, the amount of inventory at the end of the month, and the number of hired and laid off.
b. Determine the production plan that meets demand but does not hire or fire workers during the six-month period (i.e., the constant workforce strategy). Your answer should list the following for each month: number of workers, the production level, the amount of inventory at the end of the month, and the number of hired and laid off.
5. The cost of holding one unit for one month is $1. The cost of hiring one worker is $1,000 and the cost of laying off one worker is $2,000.
a. Find the total cost of the plan you found in Problem 4(a).
b. Find the total cost of the plan you found in Problem 4(b).
c. Suggest how you could modify your plan found in either Problem 1(a) or 1(b) to obtain a plan with a lower cost than the plans found in Problem 1(a) and Problem 1(b), while still meeting demand in every month. You do not need to provide a complete new plan or the cost of your new plan; you only need to say what modification you would make.