Problem 13-1 (Algo) Suppose you have been given responsibility for developing the six-month aggregate production plan at Soda Galore, a manufacturer of soft drinks. Your company makes three types of soft drinks: regular, diet, and super-caffeinated. Fortunately, all three types are made using the same production process, and the costs related to switching between the three types are so minimal that they can be ignored. Thus, you can treat your problem as an aggregate planning exercise where the planning unit is cases of soft drinks, regardless of what types of drinks they are The S&OP team has developed a forecast of demand for the first six months of the year as shown in Table 13-3. The S&OP team has also provided you with the cost data shown in Table 13-4. The material cost of a case of soda is the same regardless of whether it is produced in regular time or overtime. TABLE 13-3 Monthly Demand at Soda Galore Month January February March April Derand Forecant 24,000 cases 16,000 cases 32,000 case 40.000 cases 24,000 case 84,000 canon cass 240,000 cases 40,000 cases May June Total Perand Average Monthly Demand TABLE 13-4 Soda Galore Planning Data B Current workforce I workers Average monthly output per worker Inventory holding cost 4,000 cases per month $6.40 per case per month Regular wage rate $16.00 per hour 240 hours De production hours/month/worker Overtime wage rate Hiring cost rate Subcontracting coat Firing/layoff cont Beginning investory $24.00 per hour $1,000 per worker $ 1.70 per CARD $1,500 per worker 7,000 (all safety stock) Assume that employees negotiate an increase in the regular production wage rate to $20 per hour and $30 per hour for overtime. Assume Soda Galore always plans to hold at least 7,000 cases of safety stock to meet unanticipated customer demand. Also assume that hiring and layoff/firing, if necessary, occur at the beginning of the month. a. Using the planning information and the newly negotiated wage rates, develop a six-month production plan based on level production. (Leave no cells blank - be certain to enter "0" wherever required.) Level Production Plan Overtime o Ending Month Demand Regular Production Subcontract Production Inventory Workers Required (4,000 cases/worker) Hire Fire layoff Jan Feb. March Apri May June Total b. Determine the cost of the level production plan. Total cost c. Using the planning information and the newly negotiated wage rates, develop a six-month production plan based on chase production. For the Overtime or Subcontract Plan, use the lowest monthly demand value to compute the size of the fixed workforce. (Leave no cells blank - be certain to enter "0" wherever required.) Chase Production Plan : Adjust Workforce Size Denular Month Demand Regular Overtime or Ending Workers Required Production Subcontract Production Inventory 14.000 cases/worker) Hire Fire layoff Jan Feb. March April May June Total Overtime or Subcontract Workers Required Month Demand Overtime or Ending Regular Production Subcontract Production Inventory Hire Fire layoff (4,000 cases/worker) Jan Feb. March April May June Total d. Determine the cost of the chase production plan. Total cost if workforce size adjusted Total cost if overtime production used Total cost if subcontracting used e. After much internal discussion, the company decides to maintain a permanent workforce of 8 production workers. Given the same planning information and this new requirement, develop a six-month production plan based on hybrid production. (Leave no cells blank - be certain to enter "0" wherever required.) Hybrid Plan Regular Overtime or Ending Month Demand Workers Required (4,000 cases/worker) Hire Fire layoff Production Subcontract Production Inventory Feb. March April May June Total f. Determine the cost of the hybrid production plan. Use the overtime cost. Total cost