Question: A company has hired you to develop an aggregate plan to determine the number of workers they will need for the next 9 months (February

A company has hired you to develop an aggregate plan to determine the number of workers they will need for the next 9 months (February through October). This company makes 8 different products. The time (in hours) required to produce each product is as follows:

Product

Number of hours to produce 1 unit

Product A

1.82

Product B

0.86

Product C

2.55

Product D

4.49

Product E

0.89

Product F

3.78

Product G

0.75

Product H

2.29

Suppose the following demands for each product have been forecast for the next 9 months:

Month

# days per month

Forecast Demand

Product A

Product B

Product C

Product D

Product E

Product F

Product G

Product H

February

22

305

660

636

1858

424

1941

255

441

March

20

383

590

547

1162

432

2009

296

432

April

28

550

1085

980

3220

886

3642

486

802

May

21

328

711

529

1627

388

1864

252

363

June

25

184

424

346

1127

295

1213

153

267

July

27

201

419

417

1345

295

1357

193

285

August

31

417

718

598

2122

500

1919

284

488

September

28

234

601

499

1613

363

1561

224

375

October

31

120

244

186

662

153

630

88

167

When developing aggregate plans the company assumes workers regularly work 8 hours each day; no overtime or subcontracting will be used. The firm would like to maintain a minimum buffer inventory (i.e. safety stock) each month (see table below). The starting inventory level (i.e. inventory at end of January), desired inventory at the end of the planning horizon (in addition to monthly safety stock), initial workforce level, hiring cost, firing cost, regular time cost, and inventory holding cost (in $ per aggregate unit per month) are shown in the table below. Based on the aggregate forecast demand and planning parameters (in table below), determine the number of workers this company will need over the next 9 months using the following aggregate planning strategies.

Safety Stock (in aggregate units)

600

Beginning of planning horizon Inventory (in aggregate units)

1000

End of planning horizon Inventory, additional to any SS (in aggregate units)

0

# workers employed at end of January

100

Hiring Cost (in $ per hired worker)

$1,000

Firing Cost (in $ per fired worker)

$500

Regular Time Cost (in $ per hour)

$45.00

Inventory Holding Cost (in $ per aggregate unit per month)

$7.50

  1. Find the minimum constant workforce needed to meet demand assuming no shortages are allowed (i.e. no negative inventory in any month). What is the cost associated with this constant workforce strategy? Note: use scheduled idle time to find the minimum cost solution.

  1. Find the number of workers needed each month using the zero inventory strategy (no shortages allowed). What is the cost associated with this zero inventory workforce strategy? Note: use scheduled idle time to find the minimum cost solution.

  1. Find the number of workers needed each month using a mixed strategy (no shortages allowed). What is the cost associated with this mixed strategy? Note: use scheduled idle time to find the minimum cost solution.

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