Assume you have been given the job to develop an effective approach to the probl

ID: 452319 • Letter: A

Question

Assume you have been given the job to develop an effective approach to the problem. First, here is the forecast developed by Marketing: The production manager said there were currently 50 units in inventory, and they would like to end the 6 months with only 25 in inventory. He also said that currently each worker produces an average of 25 pumps in any given month. There are currently 20 workers in the medium-size pump area. Try to develop a possible hybrid plan that would accomplish the task with smaller total costs than either level or chase.

Explanation / Answer

As we have only 20 full time workers for production and have continuous shortage in our production therefore let’s assume some contract workers (assuming same level of work per contract worker) based on requirement for each month to meet the demand. for first month we can take on extra worker to produce 25 units more to maintain a constant level of inventory of 25 units which is also our requirement at the end of 6 month.

Month

total

Forecasted Demand

600

750

1000

850

750

700

4650

Production at current level of worker

500

3000

Inventory 50

shortage

250

500

350

250

200

1600

Production by worker on contract

250

500

350

250

200

number of contract workers at each month

Inventory at new level of production

We cannot calculate the cost as no information regarding the cost is given here.