Problem 1:
In this problem, you are to test the validity of your forecasting model. Here are the actual demands that occurred and the forecasts for a model you have been using:
|
Week
|
Actual
|
Forecast
|
|
1
|
900
|
800
|
|
2
|
1,000
|
850
|
|
3
|
1,050
|
950
|
|
4
|
900
|
890
|
|
5
|
900
|
900
|
|
6
|
1,100
|
975
|
Decide whether the forecasting model you have been using is giving reasonable results. Justify your answer.
Problem 2:
Tampa's Soda Pop, Inc. has a new fruit drink for which it has high hopes. Don Hammond, the production planner, has assembled the following data and demand forecast:
|
Quarter
|
Forecast
|
|
1
2
3
4
|
1,800
900
1,600
1,100
|
Previous quarter's output = 1,100 cases
Beginning Inventory = 160 cases
Backorder cost = $35 per case at the end of the quarter
Inventory holding cost = $30 per case at the end of quarter
Hiring employees = $30 per case
Firing employees = $40 per case
Subcontracting cost = $80 per case
Unit cost on regular time = $20 per case
Overtime cost = $15 extra per case
Capacity on regular time = 1,800 cases per quarter
Capacity on overtime = 200 cases per quarter
Develop an aggregate plan using the three following options:
Plan A: Chase strategy that hires and fires personnel as necessary to meet the forecast.
Plan B: Level strategy. (Overtime not allowed)
Plan C: Level strategy that produces 1,100 units per quarter and meets the forecasted demand with overtime, subcontracting and inventory building (backorder is not allowed).
If you are the production manager, which plan do you implement and why?