Question

Refrigeration Corp. needs an aggregate plan for January through June for its refrigerator production. The company has developed the following data: Click the icon to view the company's data. Consider the two following strategies. a) Plan A: Vary the workforce so that production meets the forecasted demand (maintain inventory at 250 units). Bell had eight employees on staff in December Part-time labor is available. Complete the following table (enter your responses as whole numbers). Regular Time Demand Decrease (Units) Period Jan Ending Inventory 250 Production 400 Increase (Units) 80 400 0 Feb 500 500 250 100 0 Mar 550 550 250 50 0 Apr 700 700 250 150 0 800 800 250 100 May June 700 700 250 0 100 Plan A's cost = $ 214400 (enter your response as a whole number).

Please help me fill those in

and also what is Plan B's cost = ____$? (enter your response as a whole number)

Answer 1

We solve the given problem in POM-QM as shown below:

Regular time cost per unit = Labor cost per hour * Hours per refrigerator = 12 * 4 = $48

Overtime cost per unit = Overtime cost per hour * Hours per refrigerator = 18 * 4 = $72

Current production in December = No. of workers * Hours per day * Days per month / Hours per unit = 8 * 8 * 20 / 4 = 320 units

We enter the required data as shown below:

Period Demand Overtime Capacity Unit costs Value Jan Feb Mar Apr May June 400 500 550 700 800 700 Regular time Capacity 400 400 400 400 400 400 0 0 0 0 0 0 Subcontract Capacity 0 0 0 0 0 0 Regular time Overtime Subcontracting Holding/carrying cost Lost sales cost Increase cost Decrease cost Initial Inventory Units last period 42 72 80 8 0 40 80 250 320

On solving, we get

Demand Regular time Capacity Regular time production Inventory (end PD) Shortage (end PD) Units increase 80 Initial Inventory Jan Feb Mar Apr May June Total(units) 400 500 550 700 800 700 3650 400 400 400 400 400 400 2400 400 400 400 400 400 400 2400 @$42 /unit $100800 250 250 150 0 0 0 0 400 @$8 /unit $3200 0 0 0 0 0 300 0 400 0 300 0 1000 80 @$0 /unit @$40 /unit $0 $3200 Subtotal Costs Total Cost $107200

The above solution in the table format as per question is:

Regular Time Month Demand Production Shortage Ending Inventory 250 Increase Decrease (Units) (units) 320 400 250 0 500 150 0 0 1 2. 3 4 5 6 0 Jan Feb Mar Apr May June 400 400 400 400 400 550 700 80 0 0 0 0 0 0 0 0 0 0 0 800 0 300 400 300 700 400 0 0

Required answer in green.

Plan B's cost = $107200 as seen from middle table above

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