9/27/2020 Homework Week 8 Ch 13-Ming Wang

Instructor: Ming Wang

Student: _____________________
Course: OPMT620 Operations Management 2020 Assignment: Homework Week 8 Ch 13
Date: _____________________
Summer

1. The objective of aggregate planning is usually to

A. to determine which plans are feasible in the coming months and which are not.
B. specify what is to be made and when.

a
C. meet forecast demand while minimizing cost over the planning period.

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D. provide input to material requirements planning systems.

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2. Which of the following occurs first within a production planning system?

A. detailed work schedules for people

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B. priority scheduling for products

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C. aggregate planning
D. master production schedule

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3. What is an alternative name for revenue management?

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A. yield management
B. income management

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C. cash flow management
D. price and demand management co rc
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*4. Which choice best describes level scheduling?
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A. Price points are calculated to match demand to capacity.

B. Subcontracting, hiring, and layoffs manipulate supply.
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C. Daily production is variable from period to period.

D. Seasonal demand fluctuations are matched without hirings or layoffs.
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E. Inventory goes up or down to buffer the difference between demand and production.
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is
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9/27/2020 Homework Week 8 Ch 13-Ming Wang

5. Prepare a graph of the monthly forecasts and average forecasted demand for Industrial Air Corp., a manufacturer of a variety of large air conditioners for commercial
applications.

Month Production Days Demand Forecast

January 22 1,000
February 18 1,100
March 22 1,200
April 21 1,300
May 22 1,350
June 21 1,350

a
July 21 1,300

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August 22 1,200
September 21 1,100
October 22 1,100

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November 20 1,050
December 20 900

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Find the needed production each day. (Enter your response to the nearest tenth.)

sh
Needed Production
Month Production Days Demand Forecast
Each Day
January 22 1,000 45.5

as
February 18 1,100 61.1

w
March 22 1,200 54.5
April 21 1,300 61.9

m e
May 22 1,350 61.4
June
July co rc
21
21
1,350
1,300
64.3
61.9
o. ou
August 22 1,200 54.5
September 21 1,100 52.4
er res

October 22 1,100 50.0

November 20 1,050 52.5
December 20 900 45.0
se dy

The average production needed per day is 55.4 . (Enter your response to the nearest tenth.)
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Choose the correct graph below.

s
H

Click here to view graph A.1

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Click here to view graph B.2

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Click here to view graph D.3

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9/27/2020 Homework Week 8 Ch 13-Ming Wang
Click here to view graph C.4

1: Graph A

70 Forecast demand
60
50
40
30
Level of production using average of

a
20
10 monthly forecast demand

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0
Jan. Feb. Mar. Apr. May June July Aug. Sep. Oct. Nov. Dec. = Month
20 20 22 21 22 21 21 22 21 22 18 22 = Number of

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working days

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2: Graph B

sh
70 Forecast demand
60
50

as
40
30
Level of production using average of

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20
10 monthly forecast demand
0
Jan. Feb. Mar. Apr. May June July Aug. Sep. Oct. Nov. Dec. = Month

m e
co rc 22 18 22 21 22 21 21 22 21 22 20 20 = Number of
working days
o. ou
3: Graph D
er res

70 Forecast demand
60
50
se dy

40
30
20 Level of production using average of
monthly forecast demand
ur tu

10
0
Jan. Feb. Mar. Apr. May June July Aug. Sep. Oct. Nov. Dec. = Month
s
H

22 18 22 21 22 21 21 22 21 22 20 20 = Number of
working days
is
Th

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9/27/2020 Homework Week 8 Ch 13-Ming Wang

4: Graph C

70 Forecast demand
60
50
40
30
20 Level of production using average of
10 monthly forecast demand

a
0
Jan. Feb. Mar. Apr. May June July Aug. Sep. Oct. Nov. Dec. = Month

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20 20 22 21 22 21 21 22 21 22 18 22 = Number of
working days

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sh
as
w
m e
co rc
o. ou
er res
se dy
ur tu s
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is
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9/27/2020 Homework Week 8 Ch 13-Ming Wang

6. A Juarez, Mexico, manufacturer of roofing supplies has developed monthly forecasts for a family of products. Data for the 6-month period January to June are
presented in the table below. There are 8 hours of production per day.

a) The firm would like to begin development of an aggregate plan. For this plan, plan 5, the firm wishes to maintain a constant workforce of 6, using subcontracting to
meet remaining demand. Evaluate this plan.

To determine whether this plan is desirable, first calculate demand per day for each month (enter your responses rounded to the nearest whole number).

Table 1
Avg Dem Per Other data

a
Production Demand Prod. Day Inventory carrying cost $5 per unit per month

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Month Days Forecast Subcontracting cost per unit $20 per unit
1 January 22 900 41 Average pay rate $10 per hour ($80 per day)
2 February 18 700 Overtime pay Rate $17 per hour (above 8 hrs

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39
per day)
3 March 21 800 38 Labor-hours per unit 1.6 hrs per unit
4 April 21 1,200 Cost of increasing daily $300 per unit

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57
5 May 22 1,500 68 production rate (hiring &
training)

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6 June 20 1,100 55 Cost of decreasing daily $600 per unit
production rate (layoffs)

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The production rate per day = 30 units. (Enter your response as a whole number.)

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Fill in the table below. (Enter your responses as whole numbers.)

m e
Regular Subcontract

co rc 1
Month
January
Demand
900
Production
660
(Units)
240
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2 February 700 540 160
3 March 800 630 170
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4 April 1,200 630 570

5 May 1,500 660 840
6 June 1,100 600 500
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The total regular production cost = $ 59,520 . (Enter your response as a whole number.)
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The total subcontracting cost = $ 49,600 . (Enter your response as a whole number.)
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H

Total cost with plan 5 = $ 109,120 . (Enter your response as a whole number.)
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b) Juarez has yet a sixth plan. A constant workforce of 7 is selected, with the remainder of demand filled by subcontracting. Evaluate this plan.
Th

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9/27/2020 Homework Week 8 Ch 13-Ming Wang
The production rate per day = 35 units. (Enter your response as a whole number.)

Fill in the table below. (Enter your responses as whole numbers.)

Regular
Month Demand Production Subcontract (Units)
1 January 900 770 130
2 February 700 630 70

a
3 March 800 735 65

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4 April 1,200 735 465
5 May 1,500 770 730
6 June 1,100

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700 400

The total regular production cost = $ 69,440 . (Enter your response as a whole number.)

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The total subcontracting cost = $ 37,200 . (Enter your response as a whole number.)

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Total cost with plan 6 = $ 106,640 . (Enter your response as a whole number.)

as
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m e
co rc
o. ou
er res
se dy
ur tu s
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is
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9/27/2020 Homework Week 8 Ch 13-Ming Wang

7. The president of Hill Enterprises, Terri Hill, projects the firm's aggregate demand requirements over the next 8 months as follows:

January 1,400 May 2,200

February 1,600 June 2,200
March 1,800 July 1,800
April 1,800 August 1,800

Her operations manager is considering a new plan, which begins in January with 200 units of inventory on hand. Stockout cost of lost sales is $100 per unit. Inventory
holding cost is $20 per unit per month. Ignore any idle-time costs. Evaluate the following plans D and E.

a
Plan D: Keep the current workforce stable at producing 1,600 units per month. In addition to the regular production, another 20% of the normal production units can

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be produced in overtime at an additional cost of $50 per unit. A warehouse now constrains the maximum allowable inventory on hand to 400 units or less. If
production and/or inventory are adequate, do not produce any units in overtime.

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Note: Do not produce in overtime if production or inventory are adequate to cover demand.

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Plan D

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Production O.T. Production Ending
Month Demand (Units) (Units) Inventory Stockouts (Units)
0 December 200

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1 January 1,400 1,600 0 400 0
2 February 1,600 1,600 0 400 0

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3 March 1,800 1,600 0 200 0
4 April 1,800 1,600 0 0 0

m e
5 May 2,200 1,600

co rc
6 June 2,200 1,600
320
320
0
0
280
280
o. ou
7 July 1,800 1,600 200 0 0
8 August 1,800 1,600 200 0 0
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The total overtime production cost = $ 52,000 . (Enter your response as a whole number.)

The total inventory holding cost for January through August = $ 20,000 . (Enter your response as a whole number.)
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The total stockout cost = $ 56,000 . (Enter your response as a whole number.)
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The total cost, excluding normal time labor costs, for Plan D = $ 128,000 . (Enter your response as a whole number.)
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H

Plan E: Keep the current workforce, which is producing 1,600 units per month, and subcontract to meet the rest of the demand. Subcontract cost is $75 per unit. The
is

warehouse and overtime constraints from Plan D do not apply to this plan.
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9/27/2020 Homework Week 8 Ch 13-Ming Wang
Plan E

Production Ending
Month Demand (Units) Subcontract (Units) Inventory
0 December 200
1 January 1,400 1,600 0 400
2 February 1,600 1,600 0 400
3 March 1,800 1,600 0 200
4 April 1,800 1,600 0 0

a
5 May 2,200 1,600 600 0

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6 June 2,200 1,600 600 0
7 July 1,800 1,600 200 0

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8 August 1,800 1,600 200 0

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The total subcontracting cost = $ 120,000 . (Enter your response as a whole number.)

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The total inventory holding cost for January through August = $ 20,000 . (Enter your response as a whole number.)

The total cost, excluding normal time labor costs, for Plan E = $ 140,000 . (Enter your response as a whole number.)

as
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m e
co rc
o. ou
er res
se dy
ur tu s
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is
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 9/27/2020 Homework Week 8 Ch 13-Ming Wang

8. Consuelo Chua, Inc., is a disk drive manufacturer in need of an aggregate plan for July through December. The company has gathered the following data given in the
tables. There are 8 hours of production per day.

You manage a consulting firm down the street from Consuelo Chua, Inc., and to get your foot in the door, you have told Mr. Chua that you can do a better job at
aggregate planning than his current staff. He said, "Fine. You do that, and you have a 1-year contract." To make good on your boast, you propose a new strategy. Hire
5 workers in August and 5 more in October, and subcontract to meet the rest of the demand. What will be the cost of this strategy?

Costs Other data

Holding cost $8/disk drive/Month Current workforce (June) 8 people

a
Subcontracting $80/disk drive Labor-hours/disk drive 4 hours
Regular-time labor $12 Workdays/month 20 days

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Overtime labor $18/hour (above 8 hours) Beginning Inventory 150 disk drives*
Hiring cost $40/worker Ending Inventory 0 disk drives
Layoff cost $80/worker

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*Note that there is no holding cost for June.

Fill in the table below. (Enter all responses as whole numbers. In the hire/fire column, use positive numbers for hires -- plus signs omitted; negative numbers for

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layoffs.)

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Beginning Units Personnel on Hire / Ending
Month Demand Inventory Produced Staff Layoff Inventory
0 June 150 8

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1 July 400 150 320 8 0 70
2 August 500

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70 520 13 5 90
3 September 550 90 520 13 0 60
4 October 700 60 720 18 5 80

m e
5 November 800

co rc
6 December 700
80
0
720
720
18
18
0
0
0
20
o. ou
The total hiring cost = $ 400 . (Enter your response as a whole number.)
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The total inventory carrying cost = $ 2,560 . (Enter your response as a whole number.)

The total cost, excluding normal time labor costs, is = $ 2,960 . (Enter your response as a whole number.)
se dy
ur tu s
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