Explain the different inputs to the production planning system in detail. $(10$ points$).$

$2.$ The following information pertains to Acme inc which is comparing different production

planning strategies:

January

Febr

uary

Mar

ch

Apri

l May June

Demand forecast $200025003000500010003500$

Number of working days $222019221820$

Inventory holding cost

Marginal cost of stockout

Marginal cost of subcontracting

$$2/$unit$/$month

$$5/$unit$/$month

$$15/$unit$/$month

Hiring and training cost $$250/$worker

Layoff cost $$175/$worker

Labor hrs required $4/$unit

straight time cost $$4/$hr

Overtime cost $$6/$hr

Beg inventory $300$

Safety stock $20\%$ of demand forecast

Assume there are $48$ workers to start with.

$2$

The aggregate plan for Acme Inc:

Janu

ary

Febr

uary

Marc

h April May June

Beg Inv $3004005006001000200$

Demand

forecast $200025003000500010003500$

Safety stock $4005006001000200700$

Production

requirement $21002600310054002004000$

Ending inv $4005006001000200700$

$($a$)$ Develop a production planning strategy for Acme inc for the $6$ months, by producing to

the exact production requirements by varying the workforce size. What is the total cost

using this plan? Show the formula used for each row. $(25$ points$).$

January February March April May June

Production

requirement

Production hrs

required

Working days$/$month

Hours$/$month$/$worker

Workers required

New workers hired

Hiring cost

Workers laid off

Lay off cost

Straight time cost

$($b$)$ Develop a production planning strategy for Acme inc for the $6$ months, by varying

inventory and stockout. What is the total cost using this plan? Show the formula used for

each row $(25$ points$).$

$3$

January February March April May June

Beg inv

Working days$/$month

Production hrs

available

Actual production

Demand forecast

Ending inv

Shortage cost

Safety stock

Units excess

Inv cost

Straight time cost

$($c$)$ Develop a production planning strategy for Acme inc for the $6$ months, by producing to

meet the minimum expected demand by using a constant workforce and subcontracting to

meet the additional requirements. What is the total cost using this plan? Show the

formula used for each row $(20$ points$).$

January February March April May June

Production requirement

Working days per month

Production hours

available

Actual production

Units subcontracted

Subcontracting cost

Straight time cost