2) Eagle Fabrication has the following aggregate demand requirements and other d

Question

2) Eagle Fabrication has the following aggregate demand requirements and other data for the upcoming four quarters. Demand 1300 1400 1500 1300 Previous quarter's output Beginning inventory Stockout cost Inventory holding cost Hiring workers Laying off workers Unit cost Overtime 1500 units 200 units $50 per unit $10 per unit at end of quarter $4 per unit $8 per unit 530 per unit $10 extra per unit Which of the following production plans is better: Plan A-chase demand by hiring and layoffs; or Plan B produce at a constant rate of 1200 and obtain the remainder from overtime? to retail

Explanation / Answer

Production planning and sheduling is more important in operations management in order to achieve the defined targets in production.Prior to production planning Demand requirements are need to be taken into consideration.

The relationship between demand and supply should be balanced to avoid wastage of materials, money ,workforce (men), usage of machines and methods.( i.e 5M principle must be followed).

After the production planning and sheduling 5R principle should be followed i.e. right product with right quality at right time and right price processed by right method.in the present production method maintaining the quality and chase demand by hiring and layoffs is less important than maintaining a constant production rate of 1200 units and depending on the demand survey the units can be added by overtime.Inventory control plays important role in demand requirements.Timely attainment of order should be given top priority in order to maintain customer loyalty.

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