BUS3500 Operations Management Case Study 3 Technical and Economic Information 1. The plant runs 5 days each week, and currently is running 10 lines with no overtime. Each line requires six people to run. For planning purposes, the lines are run for 7.5 hours cach normal shin. Employees, though, are paid for 8 hours' work. It is possible to run up to 2 hours of overtime each day, but it must be scheduled for a week at a time, and all the lines must run overtime when it is scheduled. Workers are paid $20.00/hour during a regular shift and $30.00/hour on overtime. The standard production rate for each line is 450 cases/hour. 2. The marketing forecast for demand is as follows: Q12,000: Q2-2,200; Q32.500: Q42,650; and Q1 (next year) 2.200. These numbers are in 1,000-case units. Each number represents a 13-week forecast 3. Management has instructed manufacturing to maintain a two-week safety stock supply of pudding inventory in the warehouses. The two-week supply should be based on future expected sales. The following are ending inventory target levels to comply with the safety stock requirement for each quarter: Q1-338: Q2-385: 03-408:04-338 4. Inventory carrying cost is estimated by accounting to be $1.00 per case per year. This means that if a case of pudding is held in inventory for an entire year, the cost to just carry that case in inventory is $1.00. If a case is carried for only one week, the cost is $1.00/52, or $0.01923. The cost is proportional to the time carried in inventory. There are 200,000 cases in inventory at the beginning of Q1 (this is 200 cases in the 1.000 case units that the forecast is given in) 5. If a stock out occurs, the item is backordered and shipped at a later date. The cost when a backorder occurs is $2.40 per case due to the loss of goodwill and the high cost of emergency shipping 6. The human resource group estimates that it costs $5,000 to hire and train a new production employee. It costs $3,000 to lay off a production worker 7. Make the following assumptions in your cost calculations: Inventory costs are based on inventory in excess of the safety stock requirement. Backorder costs are incurred on the negative deviation from the planned safety stock requirement, even though planned inventory may be positive. Overtime must be used over an entire quarter and should be based on hours per day over that time. Questions Prepare an aggregate plan for the coming year, assuming that the sales forecast is perfect. Use the spreadsheet "Bradford Manufacturing." In the spreadsheet, an area has been designated for your aggregate plan solution. Supply the number of packaging lines to run and the number of overtime hours for each quarter. You will need to set up the cost calculations in the spreadsheet You may want to try using the Excel Solver to find a low cost solution. Remember that your final solution needs an integer number of lines and an integer number of overtime hours for each quarter (Solutions that require 8.9134 lines and 1.256 hours of overtime are not feasible.) It is important that your spreadsheet calculations are set up so that any values the number of lines and overtime hours rows evaluates correctly. Your spreadsheet will be evaluated based on this 2. Find a solution to the problem that goes beyond just minimizing cost. Prepare a short write-up that describes the process you went through to find your solution and that justifies why you think it is a good solution