MBA Inc. assembles lawn mowers and snow blowers from subassemblies and component parts

provided by reliable vendors. Both products $($end items$)$ utilize the same small engines, many of the same

parts and require the same assembly time and employee labor skills.

On December $20,$ the Production Planning Committee of MBA Inc. is due to adopt an aggregate

plan for the coming year. The available planning information is as follows:

Information: Demand Forecasts

Quarter Lawn Mowers Snow Blowers

Q $-$ I $11,0009,000$

Q $-$ II $16,0007,000$

Q $-$ III $17,00019,000$

Q $-$ IV $3,00010,000$

Quarter $-$ I Beginning Inventory: Mowers $2600$; blowers $1400$

Output and Costs:

Regular Time $$5\mathrm{.}00$ per unit

Overtime $$7\mathrm{.}50$ per unit

Subcontract $$10\mathrm{.}00$ per unit

Part Time $$12\mathrm{.}00$ per unit

Inventory $$4\mathrm{.}00$ per unit per quarter based on avg. inventory during each quarter

Backorders $$8\mathrm{.}00$ per unit per period $($based on backorders at end of period$)$

Hiring $$100\mathrm{.}00$ per employee $($Full$-$Time or Part$-$Time$)$

Layoff $$500\mathrm{.}00$ per employee $($no cost if Part$-$Time$)$

Production Rates:

Regular $500$ units per Full$-$Time employee per quarter $($of either unit$)$

Overtime up to $200$ units per Full$-$Time employee per quarter $($of either unit$)$

Temporary $400$ units per Temporary employee per quarter $($of either unit$)$

Subcontract Maximum subcontract output available is $5200$ units per quarter

Given all of this planning information, develop a series of aggregate plans to meet the criteria presented in

the following series of problems. All plans must include full costs and hiring$/$layoff actions, as needed. Show

all plans using one of the worksheets at the end of this document.

$1.$ A$.$ Develop an aggregate plan which utilizes a level $($constant$)$ rate of output each quarter using

only full$-$time employees without overtime. Ending inventory for quarter IV is $2000$; this

means, of course, that there will be no backorders at the end of quarter IV$.$ Backorders may

occur at the end of the other quarters.

B$.$ If each shipping container for a completed mower or blower requires $6$ cu$.$ ft$.$ of space, what

is the maximum amount of cubic feet of space that would be needed in the finished goods

warehouse if your plan $1-$A is adopted? $($Assume that sales and production occur at a steady,

daily rate within each quarter.$)$

C$.$ If the cost of each completed end item is $$200\mathrm{.}00,$ what is the maximum amount of capital

that will be tied up in finished goods inv

entory during the year? $($Continue with the

assumption given for $1$B$.)$

$2.$ Suppose that on December $21$ the long$-$range weather forecast is released by the weather service

and more snow than normal is predicted. As a result, the Marketing Dept. raises their forecast for

Quarter I sales of blowers from $9,000$ to $11,000$ units $($all other forecasts remain unchanged$).$ You

will now have to develop and analyze several alternative plans for next year. Each of these plans

must meet the other criteria listed in problem $1$ with the same starting inventory and Full$-$Time work

force.

a$)$ Total beginning inventory of $4000$ units.

b$)$ Ending Qtr$.$ IV inventory of $2000$ units $($which means no backorders; backorders can occur

at the end of other quarters$).$

c$)$ Each plan must have the same level total output rate each quarter.

A$.$ Develop a plan that uses overtime by regular, full$-$time employees to meet the new demand

conditions.

B$.$ Plan $2-$B will use full time employees for regular output $($no overtime$)$ plus subcontracting

to meet the new demand conditions.

C$.$ Hire an additional full$-$time employee $($or employees$)$ at the start of Qtr$.$ I and employ those

hires for the full year.

$3.$ The V$.$P of Marketing is not all that happy with the large volume of backorders in your plan from

question $1$A $.$ She asks that you develop a plan that results in no backorders at any time during the

year. The V$.$P$.$ of manufacturing says that he will insist that any such plan specify level output each

quarter. The V$.$P$.$ of Finance states that you no longer need to have a Qtr$.$ IV ending inventory of

$2000$ units.

Using the original forecast data, beginning inventory, starting number of full time employees, etc.

from problem $1,$ deOn Dec. $22$ the V$.$P$.$ Finance informs you that the availability of capital will be extremely tight next

year. As a consequence, he asks you to develop a radically different type of aggregate plan based

on a "Chase" strategy. Ending inventory and backorders is to be zero at the end of each quarter.

The V$.$P$.$ Manufacturing says he realizes this type of strategy will require him to abandon his beloved

"level" strategy and for you to vary the total output rate from one quarter to another. The

productivity planning factors for each type of output are repeated here $($note that there are some

limits in a couple of the categories$)$

Option Productivity Limitations

Full$-$Time Employees $500$ units$/$worker$/$qtr

Overtime $($FTE$)$ Up to $200$ units$/$worker$/$qtr

Subcontract Up to $5200$ units$/$qtr

Finally, the personnel manager informs you that due to end of the year rewuirements, only $32($not $45)$ full time employees will be on your payroll as of the begining of Qtr $1.$ These requirements will occur at the end of the prior year $.$ As such, you do not show a layoff adjustmrent at the start of QRT $1.$

Using the original forecasts and begining inventory information for problem $1,$ develop a "chase" plan following the guidlines noted above.