Question 4: Problem Solving Question 4

The Bogard Corporation produces bookcases. The department current has 20 workers and each worker produces 5 bookcases per month. The operations manager is considering an aggregate production plan for the next six months. The manager knows that the opening inventory for this plan is 10 bookcases. The demand for each month is given in the following table. The cost and production information is given as follows: Cost data

Regular-time labour cost :$6 per bookcase Overtime labour cost :$9 per bookcase Subcontracting cost : $12 per bookcase Holding cost: $1 per bookcase per month Hiring cost: $50 per worker Firing cost: $40 per worker

Production: Max. overtime output 30 bookcases per month

1) Use a level approach to develop an aggregate plan using the highest demand to be the constant output rate/month. Use the table below to assist your analysis and develop an aggregate plan. What is the total cost of this plan?

Month	Demand (units)	Total production	Workforce Level	Inventory	Regular Production	Overtime Production	Subcontract	Hiring	Firing
Opening
1	90
2	110
3	120
4	150
5	100
6	80

2) Use a chase approach to develop an aggregate plan. If the company would like to use the on-hand inventory as early as possible, what is the total cost of this plan? Use the table below to assist your analysis and develop an aggregate plan.

Month	Demand (units)	Total production	Workforce Level	Inventory	Regular Production	Overtime Production	Subcontract	Hiring	Firing
Opening
1	90
2	110
3	120
4	150
5	100
6	80

3) Keep the initial workforce level and use overtime and subcontract as needed, can vary production rate, no backorders and no hiring/firing. Inventory at the end of month 6 is 40. What is the total cost of this plan?

Month	Demand (units)	Total production	Workforce Level	Inventory	Regular Production	Overtime Production	Subcontract	Hiring	Firing
Opening
1	90
2	110
3	120
4	150
5	100
6	80