Tools for Fools Ltd makes a number of different tools for the domestic market. These tools are sold through the major do it yourself (DIY) retailers such as B&Q. However, most DIY enthusiasts have a seasonal demand for tools, especially tool kits with more than one item in, which means that when the weather is warm and sunny the DIY enthusiast works on various projects often related to gardening, kitchen refurbishment and outdoor repair jobs. Thus, there is a strong seasonal demand for tools such as screwdrivers, spanners, wrenches, plumbing tools and equipment. Tools for Fools Ltd, have collected data over the years and have forecasted the demand for screwdriver tool kits for the following year (visible in the excel file attachment). The maximum production of screwdriver tool kits per eight-hour day is 300 and the opening stock is 100 screwdriver tool kits in January. The company normally works seven days a week.

The absolute maximum storage capacity of their finished goods storage is 5,000 screwdriver tool kits. If this is exceeded, they need to buy warehousing space elsewhere. Opening stock in January is 100 units.
Assume there are four weeks in a month (= maximum amount of working days is 28 per month) and capacity can be changed by 300 units by not working/or working on screwdriver tool kits for a day
E.g. your maximum production volume per month is 300 * 28 = 8400. If you choose to work only on 27 days per month, volume will be decreased to 8100 per month, etc.
Produce two aggregate production plans for the screwdriver tool kits: A) level production and B) chase demand
Evaluate your plans, what are their pros and cons?
What would happen to the plans in question 1 above if the opening stock in January was 3,400 units of the screwdriver tool kits? Calculate!
Take the best option of the plans you made above, and produce a MPS for two different types of screwdriver tool kits, pink and black. Historically, demand for these two models has been in ratio of 60% black and 40% pink of the total forecasted demand (provided in the excel for task 1). Use the same opening stock you had in your aggregate production plan but split it between the two kits using the same ration, 60% of the opening inventory is black, and 40% pink.
In real life, what kind of factors would you have to consider when making such production plans? Which functions and other stakeholders of the Tools for Fools Ltd company will this plan effect on? Why?
If you would have to forecast the next year’s demand for the screwdriver tool kits using the data you now have available, which demand forecasting method would you use and why?

NOTE:
It might be the case that there isn’t a perfect plan available no matter what you try to do. You just need to evaluate pros and cons of your solutions and explain them in detail when answering question 2.

Answer rating: 100% (QA)

1 The two aggregate production plans for the screwdriver tool kits are as follows A Level production This production plan involves maintaining a const... View the full answer