2· (8 points) ABC Company, a manufacturer of roofing supplies, has developed mon

Question

2· (8 points) ABC Company, a manufacturer of roofing supplies, has developed monthly forecasts for roofing tiles. The forecasted demand and the expected production days for months January to June in 2018 are given below Month Forecasted Production demand (units) 1200 2500 1300 3500 1200 1700 days January February March Apri May June 19 21 20 20 ABC works S regular hours in each working day and past experience shows that one worker takes 2 hours to produce one tile. The company had 15 workers in December 2017 and 550 tiles in inventory at the end of December 2017. ABC wants to keep at least 200 tiles in inventory at the end of June 2018. ABC has the following cost information: Inventory holding cost S5/unit/month Straight time labor cost 10/hour Hiring cost Firing cost $1000 $2000 If ABC does not allow backorders and does not use subcontracting or overtine a. 3 points) Find the minimum constant workforce required to meet the above requirement b. 3 points) Develop an aggregate production plan with the minimum constant workforce c. (2 points) Estimate the total cost of the plan in (b). (level production strategy-no stockouts). obtained in part (a).

Explanation / Answer

Methodology :- we have to arrive a minimum constant workforce to meet level production strategy and no stockouts. here I am assuming that this minimum level workforce is for duration of 6 months i.e. from Jan to Jun constant workforce. To arrive at this i constructed the following table in excel. the calculations are easy and simple. We have an initial inventory and a demand the difference among them will give min required inventory. Max tiles produced is given by number of production days*8* number of workers /2. Final inventory is inventory required minus inventory made. The last month final inventory has to be min 200. So by trial and error and keeping the number of workers as constant I evaluated the level of workers at which there is no negative inventory i.e. stockout.

In here a minimum of 27 workers are required so that there are no stockouts and a constant workforce should remain all throughout the months.

Part a and b are covered in above table .

total cost of plan in (b)

in absence of any speciication I am assuming hiring cost means one time hiring cost for one person. In our case I am hiring 12 people in one go so hiring cost = 12000

labour cost 10 / hour .... here i am assuming this to per person as well

So total cost = 256290

Month Forecasted demand Production days working hr/day Workhours available initial inventory inventory required workers Inventory made Final inventory Jan 1200 22 8 176 550 650 27 1620 970 Feb 2500 19 8 152 970 1530 27 2052 522 Mar 1300 21 8 168 522 778 27 2268 1490 Apr 3500 20 8 160 1490 2010 27 2160 150 May 1200 22 8 176 150 1050 27 2376 1326 Jun 1700 20 8 160 1326 374 27 174 200 Total 11400 124 992

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