Question

. An Excel spreadsheet containing data tables is available

2. All data in this problem set are fictitious.

3. Please round the number of required workers/agents up to the next highest integer in all problems.

Problem 1 PrintEverything is a leading 3D-printer manufacturer. Their products are quite popular recently. The following table provides the demand forecast for their most popular 3D-printer.

Month	Demand Forecast (Number of 3D-Printers)
OCT-15	5760
NOV-15	3697
DEC-15	5587
JAN-16	4815
FEB-16	6325
MAR-16	6145
APR-16	4952
MAY-16	4037
JUNE-16	5016
JUL-16	3899
AUG-16	4403
SEP-16	5452

At the end of September 2015, PrintEverything has 20 workers for this production line. Each worker is paid $3300 per month. A worker can produce 250 3D-printers per month on average. The manager of PrintEverything can hire or lay off workers at the beginning of each month. It costs PrintEverything $500 to hire a worker and $1100 to lay off a worker. Assume that new workers’ production rates are the same as experienced workers. Workers do not work overtime. At the beginning of October 2015, PrintEverything does not have any inventory of 3D-printer. At the end of every month, if there is any inventory on hand, it costs PrintEverything $15 per unit to carry it to the next period. If there are unsatisfied orders at the end of the month, a penalty cost of $40 per unit is incurred. All backorders must be fulfilled by the end of September 2016.

a. Prepare a chase aggregate plan assuming that no inventory can be carried from period to period. Please display the workforce level on a monthly basis. Compute the total cost of the chase plan.

b. Prepare a level aggregate plan allowing excess inventory and backorders. Your plan should display the inventory level or backorders at the end of each month. Compute the total cost of the level plan.

c. Based solely on the total costs you calculated in part (a) and part (b), which plan is better?

Answer 1

Below is the aggregate plan for Chase & Level strategy -

Chase Strategy
Month	Opening	Oct-15	Nov-15	Dec-15	Jan-16	Feb-16	Mar-16	Apr-16	May-16	Jun-16	Jul-16	Aug-16	Sep-16	Total	Unit Cost	Total Cost
Demand Forecast		5760	3697	5587	4815	6325	6145	4952	4037	5016	3899	4403	5452
Production		5760	3697	5587	4815	6325	6145	4952	4037	5016	3899	4403	5452
Manpower Required	20	24	15	23	20	26	25	20	17	21	16	18	22	247	3300	815100
Hired		4	0	8	0	6	0	0	0	4	0	2	4	28	500	14000
Fired		0	9	0	3	0	1	5	3	0	5	0	0	26	1100	28600
														Overall Cost		857700
Level Strategy
Month	Opening	Oct-15	Nov-15	Dec-15	Jan-16	Feb-16	Mar-16	Apr-16	May-16	Jun-16	Jul-16	Aug-16	Sep-16	Total	Unit Cost	Total Cost
Demand Forecast		5760	3697	5587	4815	6325	6145	4952	4037	5016	3899	4403	5452
Beginning Inventory		0	-752	559	-20	173	-1144	-2281	-2225	-1254	-1262	-153	452
Production		5008	5008	5008	5008	5008	5008	5008	5008	5008	5008	5008	5008
Manpower Required	20	21	21	21	21	21	21	21	21	21	21	21	21	252	3300	831600
Hired		1	0	0	0	0	0	0	0	0	0	0	0	1	500	500
Fired		0	0	0	0	0	0	0	0	0	0	0	0	0	1100	0
Difference		-752	559	-20	173	-1144	-2281	-2225	-1254	-1262	-153	452	8
Ending Inventory		0	559	0	173	0	0	0	0	0	0	452	8	1192	15	17880
Stock out		752	0	20	0	1144	2281	2225	1254	1262	153	0	0	9091	40	363640
														Overall Cost		381520

From above, it is clear that Cost with Level Strategy is lower than Chase strategy hence Level Plan is better.