Problem 14.4

Operations and Supply Chain Management 10th Edition

Rowley Apparel, manufacturer of the famous Race-A-Rama swimwear line, needs help planning production for next year. Demand for swimwear follows a seasonal pattern, as shown here. Given the following costs and demand forecasts, test these four strategies for meeting demand:

(a) Level production with overtime and subcontracting, as needed,

(b) level production with backorders as needed,

(c) chase demand

(d) 3000 units regular production from April through September and as much regular, overtime, and subcontracting production in the other months as needed to meet annual demand. Determine the cost of each strategy.

Which strategy would you recommend?

**Beginning workforce 8 workers

Subcontracting capacity unlimited

Overtime capacity 2000 units/month

Production rate per worker 250 units/month

Regular wage rate $15 per unit

Overtime wage rate $25 per unit

Subcontracting cost $30 per unit

Hiring cost $100 per worker

Firing cost $200 per worker

Holding cost $0.50 per unit/month

Backordering cost $10 per unit/month

PLEASE INCLUDE FORMULATIONS! I really want to understand this...

month	demand	reg production	Overtime	inventory	back ordered	#workers	#hired	#fired
jan	1000					8	0	0
feb	500					8	0	0
mar	500					8	0	0
apr	2000					8	0	0
may	3000					8	0	0
jun	4000					8	0	0
jul	5000					8	0	0
aug	3000					8	0	0
sept	1000					8	0	0
oct	500					8	0	0
nov	500					8	0	0
dec	3000					8	0	0
total	24000					96	0	0