Question: Trane makes a popular heat pump and wishes to develop an aggregate plan for May through October.There is no initial inventory and the present workforce
Trane makes a popular heat pump and wishes to develop an aggregate plan for May through October.There is no initial inventory and the present workforce can produce 2000 of the heat pumps a month.Heat pumps produced during regular time cost Trane $225, those produced in overtime cost $260 apiece, and any that are subcontracted cost $250 each.Holding costs for a heat pump are $30/month and shortage costs (for lost sales) are $500 each.Hiring one extra worker can increase production by 100 heat pumps and costs Trane $6000, while laying one off similarly decreases production and costs $8000 per worker.
Fill in the tables and calculate the total costs for each of the plans described below:
(a) Plan A:Vary the workforce to meet the forecast demands exactly.
Month Demand Reg OT Subc Hold Short Hire Fire
May 2500
June 3000
July 2400
August 1700
Sept 1800
Oct 2200
TCA=
(b)Plan B:Keep the current workforce and let inventory vary.First use overtime up to 10% of initial regular time capacity and then subcontracting to meet the rest of the demand.
Month Demand Reg OT Sub Hold Short Hire Fire
May 2500
June 3000
July 2400
August 1700
Sept 1800
Oct 2200
TCB=
(c)Plan C:Start the period by keeping the initial workforce.Hire 2 additional workers at the beginning of June (for June, July and August only), then let them go at the beginning of September.Allow no overtime or subcontracting, let inventory vary and shortages occur.
Month Demand Reg OT Subc Hold Short Hire Fire
May 2500
June 3000
July 2400
August 1700
Sept 1800
Oct 2200
TCC=
(d)Identify which of the three plans is the best.
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