Additional Problem on Aggregate Planning Arundel, Inc. develops an aggregate pla
ID: 2746820 • Letter: A
Question
Additional Problem on Aggregate Planning
Arundel, Inc. develops an aggregate plan at the beginning of each year. Based on its forecasts, management expects demand for each quarter to be as shown below:
Summer
Fall
Winter
Spring
Average quarterly demand
5,000 units
4,000 units
6,000 units
8,400 units
Assume that Arundel, Inc. started the First Quarter with 20 workers and 800 units in inventory. The company wishes to finish the Spring quarter with an inventory of 1200 units on hand. The average pay per worker is $9,000 per quarter, including benefits. Production per worker is 200 units per quarter. If necessary, overtime can be used up to 20% and overtime work, if used, is paid at 150% of regular pay. It costs $1,200 to hire a new worker and $1,600 to lay off a worker. Inventory carrying cost averages $20 per unit per quarter.
(A) Determine the total cost of using Level strategy. (You may use the table below.)
Resources
Summer
Fall
Winter
Spring
Total
Beg. Inventory
Production
Demand/sales
Ending Inventory
Costs
Regular labor cost
Hiring/firing cost
Inv. Carrying cost
Other costs, if any
Total
.
(B) Determine the cost of using the Chase strategy. (You may use the table below.)
Resources
Summer
Fall
Winter
Spring
Total
Beg. Inventory
Production
Demand
Ending Inventory
Costs
Regular labor cost
Hiring/firing cost
Inv. Carrying cost
Other costs, if any
Total
(C) Suppose the operations manager is considering using overtime instead of the pure chase or level strategies shown in (a) and (b) above. Suppose Arundel, Inc. decided to use level plus 10% overtime during the peak demand season (Quarter 4). How many workers will the company need during the planning period? (Please show your computations to receive credit.)
Summer
Fall
Winter
Spring
Average quarterly demand
5,000 units
4,000 units
6,000 units
8,400 units
Explanation / Answer
For parts a) and b) , refer to the excel sheet attached in the link below.
https://drive.google.com/file/d/0B61hMD5wWc0jcE90cUhEaHZJdnM/view?usp=sharing
c) As in the last quarter, we need to produce a total of 9600 units (demand 8400 and ending inventory 1200).
As we are using an overtime of 10%, therefore, every worker would be producing a total of = 200*1.1 =220 units
Therefore, the number of workers required to produce a quantity of 9600 units = 9600/ 220 = 43.636 = 44 workers
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.