USING LEVEL-UTILIZATION STRATEGY

Use the following monthly forecast to create your aggregate plans: 2021 Forecast: Month Demand 1 5689 2 6094 3 12592 4 6458 5 10246 6 15003 7 16489 8 14135 9 12092 10 9875 11 6082 12 6500 Assume 20 production days per month (4 weeks of 5 days each) The ending inventory (for December of 2020) is 3000 units Assume 0 units on backorder at the end of 2020 The number of units produced by each worker is 250 units per month The desired safety stock level is 2000 units (you can only fall below this level to avoid having backorders, even in the Chase Strategy). Average pay applies for the first 40 hours an employee works in a week. Overtime pay applies for any time over 40 hours in a given week. The maximum level of overtime any employee can work in a month is 40 hours. You must employ whole people there are no part time employees. (However, you can underutilize.) Employees do not produce more per month than is required by the plan (i.e., no efficiency gains), however than can under-produce to satisfy the conditions of the type of plan that you choose. The firm wants exactly 4000 units to be left in inventory at the end of the fiscal year (after forecasted December 2021 demand is satisfied). This is a firm requirement for all plans. The staffing level at the beginning of 2022 is to be the same as the original staffing level given below (any staffing changes needed to achieve this are made after the forecasted December 2021 demand is satisfied). This is a firm requirement for all plans. Any backorder (negative on-hand inventory) is shown as a positive value in the backorder column instead of in the inventory column since it has a different monthly cost per unit. That is, if there is backorder for a period, there will be zero on-hand inventories for that period. Be sure to fulfill backorders as soon as possible in the plan. Inventory holding cost $3 per unit per month based on ending inventory for month Average pay rate $20 an hour Overtime pay rate $30 an hour Costs of hiring one additional $4000 employee Costs of firing one employee $3000 Original Staffing Level (12/2020) 21 employees Material cost to produce one unit This cost in dollars per unit will be the average of the last two digits of the student ID numbers of all members of your group. Backorder Costs $7.50 per unit per month held based on ending backorder level for month Maximum inventory level Maximum production capacity Satisfying Demand Priorities 22,000 units due to limited warehouse capacity and increasing interest levels. 17,000 units/month using regular time. Use regular production time to meet demand if you can do so without violating the two previous constraints or the constraints of your plan type. After that, choose between using safety stock, anticipation inventory, backorder or overtime production. Choose the strategy that will lead to the lowest cost plan. Use the following monthly forecast to create your aggregate plans: 2021 Forecast: Month Demand 1 5689 2 6094 3 12592 4 6458 5 10246 6 15003 7 16489 8 14135 9 12092 10 9875 11 6082 12 6500 Assume 20 production days per month (4 weeks of 5 days each) The ending inventory (for December of 2020) is 3000 units Assume 0 units on backorder at the end of 2020 The number of units produced by each worker is 250 units per month The desired safety stock level is 2000 units (you can only fall below this level to avoid having backorders, even in the Chase Strategy). Average pay applies for the first 40 hours an employee works in a week. Overtime pay applies for any time over 40 hours in a given week. The maximum level of overtime any employee can work in a month is 40 hours. You must employ whole people there are no part time employees. (However, you can underutilize.) Employees do not produce more per month than is required by the plan (i.e., no efficiency gains), however than can under-produce to satisfy the conditions of the type of plan that you choose. The firm wants exactly 4000 units to be left in inventory at the end of the fiscal year (after forecasted December 2021 demand is satisfied). This is a firm requirement for all plans. The staffing level at the beginning of 2022 is to be the same as the original staffing level given below (any staffing changes needed to achieve this are made after the forecasted December 2021 demand is satisfied). This is a firm requirement for all plans. Any backorder (negative on-hand inventory) is shown as a positive value in the backorder column instead of in the inventory column since it has a different monthly cost per unit. That is, if there is backorder for a period, there will be zero on-hand inventories for that period. Be sure to fulfill backorders as soon as possible in the plan. Inventory holding cost $3 per unit per month based on ending inventory for month Average pay rate $20 an hour Overtime pay rate $30 an hour Costs of hiring one additional $4000 employee Costs of firing one employee $3000 Original Staffing Level (12/2020) 21 employees Material cost to produce one unit This cost in dollars per unit will be the average of the last two digits of the student ID numbers of all members of your group. Backorder Costs $7.50 per unit per month held based on ending backorder level for month Maximum inventory level Maximum production capacity Satisfying Demand Priorities 22,000 units due to limited warehouse capacity and increasing interest levels. 17,000 units/month using regular time. Use regular production time to meet demand if you can do so without violating the two previous constraints or the constraints of your plan type. After that, choose between using safety stock, anticipation inventory, backorder or overtime production. Choose the strategy that will lead to the lowest cost plan