ABC Manufacturing is developing their 2017 SOP. The sales plan is already developed, using the forecast obtained from Demand Management and is as follows: (the numbers are in 1000’s)

Jan	Feb	Mar	Apr	May	Jun	Jul	Aug	Sep	Oct	Nov	Dec
420	375	425	600	200	100	150	250	420	390	420	450

Other problem parameters are:

Initial worker level = 500, Initial inventory = 100,000, Required ending inventory = 100,000, Cost per unit = $50, one worker can produce 600 units/month

Hiring cost = $150 per worker, Firing cost = $300 per worker, Inventory holding cost = 0.5% of item cost/month, Shortage cost = 1% of item cost/month.

1.) Develop a Chase plan

2.) Develop a Level plan

For each plan, calculate the end of month inventory (or shortage) level, monthly hiring and firing schedule and costs, monthly inventory and shortage costs, and the total cost.

3.) By trial and error, come up with a mix strategy that will have less total cost than any of the above two.

Answer rating: 100% (QA)

Chase Plan Month Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Forecasted Demand 410000 385000 450... View the full answer