arks: 1,1,1,1, 1,4) Scotsburn Dairy (SD) makes over 300 types and sizes of ice c
ID: 349202 • Letter: A
Question
arks: 1,1,1,1, 1,4) Scotsburn Dairy (SD) makes over 300 types and sizes of ice cream and frozen yoghurt in its plant in Truro, Nova Scotia. For simplicity, we aggregate all the products. The plant manager has received the following aggregate demand forecasts (in units, ic, 10,000 litres) for the next 12 months: Jan Fob Mar Apr May Jun Jul Aug Sep Oct Nov Dec 140 160 190 180 180 220 240 210 170 170 160130 A major consideration is product changeover/setup time. The nanager estimates that out of 4.3 weeks per month, on average 1 week is spent for changeover/setup tinc. The production capacity of the plant is 1 unit or 10,000 litres per hour. The plant manager uses the following labour schemes: 40 hours a week (1 shift, 10 hours a day for 4 days by permanent workers), 50 hours a week (40 + 10 hours of overtime on Fridays by permanent workers), and 80 hours a week (2 shifts; 10 hours a day for 4 days cach; second shift is made of temp workers). The production cost of the 40-hour a weck labour scheme (requiring 32 workers with various skills) is $78,276 per month. Overtime production cost is 1.5 times regular time production. A temp worker's production cost is approximately the same as a permanent worker's a. Show that production by permanent workers during regular time is 132 units per month. b. Show that labour cost of production during regular time is S593 per unit. c. Show that labour cost of production by permanent workers during overtime is $889.50 per unit d. If the average hiring cost of 32 temp workers on the second shift is S495 per person, show that hire cost per unit of product produced during their first month of employment is $120 c. Using tradeoff analysis show that using a temp worker (including the hiring cost) is cheaper that using permanent workers during overtime. If temp workers are used for 4 consecutive months, determine these 4 months so that the initial inventory is 210 units, the ending inventory next Dec is 172 units, ending inventory cach month is greater than 60 units, and sum of monthly ending inventorics is minimum. Fill in the following table for your answer (including the inventorics) or attach an Excel printout. f. Period Forecast Output uan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total 140 160190 180 180 220 240 210 170 170 16o 130 2 150 132 132132 13z 1.se4 Perm (Regular time) 132 132 132 132 132 132 132 132 Termp nventory 210 Beginning Ending Cumul backorderExplanation / Answer
a) Production by permanent workers during regular time implies the first labour scheme in which permanent workers work for 40 hours a work. However, set up time every 4.3 weeks is said to be 1 week. Therefore, number of weeks left to work = 4.3 - 1 = 3.3 weeks.
Number of work hours in a month = 3.3 * 40 = 132
Units produced per hour = 1
Therefore, Units produced in 132 hours = 132.
b) Total Production cost during regular time= $78,276
Number of units produced during regular time, as shown in Part (a) = 132 units
Cost per unit = 78,276/132 = $593
c)Units produced = 132
Cost incurred total = 1.5* 78,276= 117414
Cost per unit = 117414/132 = 889.5
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