Kansas Furniture has the following estimates of demand requirements over the coming four quarters: Quarter 2...
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Kansas Furniture has the following estimates of demand requirements over the coming four quarters: Quarter 2 4 Total Expected Demand (units) 13,560 15,600 51,740 1 10,700 The following planning parameters apply: Planning Parameters 80 Current number of workers Labour hours required Number of regular time hours Number of working days Regular time labour cost Overtime labour cost Maximum overtime hours allowed Hiring cost (including training) Layoff cost Inventory holding cost Marginal cost of stockout (backordered) Opening inventory Planned ending inventory (end of Quarter 4) Material Cost Subcontracting Cost with material 3 11,880 4 hour/unit 8 hours/day 60 days/quarter $10/hour $15/hour 30% of regular worker-hours/quarter $400/worker $600/worker $3 /unit/quarter $6/unit/quarter 500 units 1,200 units $15 /unit $36/unit Answer the following questions independently: Develop aggregate production plans using the following strategies. Assume that hired workers will work from the first day of the hiring quarter and laid-off workers will stop working on the first day of the quarter. (a) Variable workforce (Chase strategy) with no ending inventory except for the last quarter. (b) A stable workforce with variable work hours (assume 80 workers are used during every quarter and no hiring and firing in any quarter). Keep no ending inventory except for the last quarter. Determine the amount of regular, overtime, and subcontract production. You must use all the overtime before you can subcontract any item. No backorder is allowed. If regular time production is not sufficient to cover the demand, first, use the overtime, and after using available overtime time, go for subcontracting. (c) Which one is the better strategy in terms of cost (No explanation is required)? NOTE: Table required for this question is available on eClass, under document name "Sales and Operations Planning Template.pdf". Prior instruction posted to keep copies of those table. You are only allowed to fill by Hand. Typed work will not be accepted, hence will not be marked. Periods Expected Demand Beginning Inventory Required Production Units Required Productions Hours Planned Regular Hours Planned Overtime Hours Actual Production Units Units Subcontracted Ending Inventory Excess Inventory Shortage Beginning Workforce (Previous Period's Workforce) Workers Hired Workers Laid-off Ending Workforce (Current Period's Workforce) Cost Calculations: Material Cost Straight-time Cost Overtime Labor cost Carrying Cost Backorder (Shortage) Cost Subcontracting Cost Hiring Cost Layoff Cost Total Cost: Total Kansas Furniture has the following estimates of demand requirements over the coming four quarters: Quarter 2 4 Total Expected Demand (units) 13,560 15,600 51,740 1 10,700 The following planning parameters apply: Planning Parameters 80 Current number of workers Labour hours required Number of regular time hours Number of working days Regular time labour cost Overtime labour cost Maximum overtime hours allowed Hiring cost (including training) Layoff cost Inventory holding cost Marginal cost of stockout (backordered) Opening inventory Planned ending inventory (end of Quarter 4) Material Cost Subcontracting Cost with material 3 11,880 4 hour/unit 8 hours/day 60 days/quarter $10/hour $15/hour 30% of regular worker-hours/quarter $400/worker $600/worker $3 /unit/quarter $6/unit/quarter 500 units 1,200 units $15 /unit $36/unit Answer the following questions independently: Develop aggregate production plans using the following strategies. Assume that hired workers will work from the first day of the hiring quarter and laid-off workers will stop working on the first day of the quarter. (a) Variable workforce (Chase strategy) with no ending inventory except for the last quarter. (b) A stable workforce with variable work hours (assume 80 workers are used during every quarter and no hiring and firing in any quarter). Keep no ending inventory except for the last quarter. Determine the amount of regular, overtime, and subcontract production. You must use all the overtime before you can subcontract any item. No backorder is allowed. If regular time production is not sufficient to cover the demand, first, use the overtime, and after using available overtime time, go for subcontracting. (c) Which one is the better strategy in terms of cost (No explanation is required)? NOTE: Table required for this question is available on eClass, under document name "Sales and Operations Planning Template.pdf". Prior instruction posted to keep copies of those table. You are only allowed to fill by Hand. Typed work will not be accepted, hence will not be marked. Periods Expected Demand Beginning Inventory Required Production Units Required Productions Hours Planned Regular Hours Planned Overtime Hours Actual Production Units Units Subcontracted Ending Inventory Excess Inventory Shortage Beginning Workforce (Previous Period's Workforce) Workers Hired Workers Laid-off Ending Workforce (Current Period's Workforce) Cost Calculations: Material Cost Straight-time Cost Overtime Labor cost Carrying Cost Backorder (Shortage) Cost Subcontracting Cost Hiring Cost Layoff Cost Total Cost: Total
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