The president of Hill Enterprises, Terri Hill, projects the firm's aggregate demand requirements over the next 8 months as follows:2,200January1,400MayFebruary1,600June2,200MarchApril1,8001,800JulyAugust1,8001,400Her operations manager is considering a new plan, which begins in January with 200 units of inventory on hand. Stockout cost of lost sales is $100 per unit.Inventory holding cost is $25 per unit per month. Ignore any idle-time costs. The plan is called plan C.Plan C: Keep a stable workforce by maintaining a constant production rate equal to the average gross requirements excluding initial inventory and allow varyinginventory levels.Conduct your analysis for January through August. EndingPeriod Month Demand Production0DecemberInventory Stockouts (Units)2001January1,4001,7752February1,6001,7753March1,8001,7754April1,8001,7755May2,2001,7756 June2,2001,7757 July1,8001,7758 August1,4001,775

In analyzing Hill Enterprises' production plan, Plan C, it's crucial to understand the implications…

Answered: The president of Hill Enterprises,…

Marketing

20th Edition

ISBN:9780357033791

Author:Pride, William M

Publisher:Pride, William M

Chapter19: Pricing Concepts

Section: Chapter Questions

Problem 6DRQ

See similar textbooks

Similar questions

The planner at a company that makes garden tractors is about to prepare an aggregate production plan that will cover the next 6 months. She has collected the following information: Month Demand Forecast Above the available capacity through permanent workforce 1 1,000 2 1,000 3 2,000 4 3,000 5 4,000 6 1,000 Total: 12,000 Production per month = 20 units per worker Initial inventory = 500 units Desired ending inventory (at the end of month 6) = 0 units Cost: Hire cost = $500 per temporary worker Inventory = $10 per tractor per month Backorder = $150 per tractor per month The optimum aggregate plan is: Month 1 2 3 4 5 6 Total Forecast Demand above regular capacity 1,000 1,000 2,000 3,000 4,000 1,000 12,000 # of temporary workers required 50 50 100 150 200 50 Temp. Workers hired 25 25 50 75 0 0 Temp. workers laid off 0…
Planners for a company that makes several models of skateboards are about to prepare the aggregate plan that will cover six periods. They have assembled the following information. Period 1 2 3 4 5 6 Total Forecast 200 200 300 400 500 200 1,800 Costs Output Regular time=$2 per skateboard Overtime =$3 per skateboard Subcontract =$6 per skateboard Inventory =$1 per skateboard per period on average inventory Back orders =$5 per skateboard per period They now want to evaluate a plan that calls for a steady rate of regular-time output, mainly using inventory to absorb the uneven demand but allowing some backlog. Prepare an aggregate plan and determine its cost using the preceding information.
Jose Martinez of El Paso had developed a polished stainless-steel tortilla machine that makes it a “showpiece” for display in Mexican restaurants. He needs to develop a 5-month aggregate plan. His forecast of capacity and demand follows: Month 1 2 3 4 5 Demand 150 160 130 200 210 Regular capacity 150 150 150 150 150 Overtime capacity 20 20 10 10 10 Subcontracting: 100 units available over the 5-month period (NOT 100 units each month) Beginning inventory: 0 units Ending inventory required at the last month (i.e. month 5): 20 units. Costs Regular-time cost per unit $100 Overtime cost per unit $125 Subcontracting cost per unit $135 Inventory holding cost per unit per month $3 Assume that backorders are not permitted. a) Find an aggregate production plan using the intuitive lowest cost approach. (i.e. Develop an aggregate plan using the transportation method). b) State the corresponding…
3) AGGREGATE PLANNING Mark Tuan, Operations Manager at GOT7 Furniture, has received the following estimates of demand requirements: January 1,100 February 1,200 March 1,400 April 1,800 May 1,800 June 1,600 Assuming stockout costs for lost sales of RM100 per unit, inventory carrying costs of RM25 per unit per month, and a zero beginning and ending inventory. Analyze the extra cost if the company vary the workforce, which performs at a current production level of 1,300 units per month. The cost of hiring additional workers is RM3,000 per 100 units produced. The cost of layoffs is RM6,000 per 100 units cut back.
LMNO Gaskets has formulated a production plan for a product to meet demand over the upcoming four quarters. Demand in each of the four quarters and production, overtime, and subcontracting capacities are reported in the table below, in addition to the feasible production plan. The relevant costs are: • Regular time production cost is $10/unit. Overtime production cost is $14/unit. Subcontracting cost is $18/unit Inventory is held at a cost of $1/unit/quarter. • Units may be backordered at a cost of $4/unit/quarter. Production Resource Regular Time Q1 Overtime Q1 Subcontract Q1 Regular Time Q2 Overtime Q2 Subcontract Q2 Regular Time Q3 Overtime Q3 Subcontract Q3 Demand in Quarter Demand in Quarter Q2 0 20 0 550 Q1 550 230 0 0 0 0 40 40 0 860 250 470 0 40 0 1330 What is the inventory cost for the year? What is the backorder cost for the year? What is the total cost for the year? Q3 0 0 0 0 0 30 510 160 0 700 What is the total overtime production cost for the year? Capacity 550 250 500…
The president of Hill Enterprises, Terri Hill, projects the firm's aggregate demand requirements over the next 8 months as follows: alculator DEPREFERESSESES Cara be Her operations manager is considering a new plan, which begins in January with 200 units of inventory on hand. Stockout cost of lost sales is $65 per unit. Inventory holding cost is $20 per unit per month. Ignore any idle-time costs Evaluate the following plan. This exercise contains only Plan E. Plan E: Keep the current workforce, which is producing 1,600 units per month, and subcontract to meet the rest of the demand. Subcontract cost is $75 per unit. mummill M Pla $100433443 January February March April MESS Month 0 December 1 January 2 February 3 March 4 April 5 May 6 June 7 July 8 August Ask my instructor 1,400 1,600 1,800 1,800 Demand 1.400 1,600 1,800 1,800 2,200 2,100 1,800 1.400 May June July August Production (Units) 1,600 1,600 1,600 1,600 1,600 1,600 1,600 1,600 2,200 2.100 1.800 1,400 S Plan E Subcontract…
JAYB, manager of a Fabrication company, has the following aggregate demand requirements and other data for the upcoming four quarters. Table 5: Forecast and cost information [Jadual 5: Maklumat Ramalan dan kos] Quarter [Suku] Demand [Permintaan] Previous quarter's output [Keluaran suku sebelumnya] 1,500 units 1 1,400 Beginning inventory [Inventori awal] 200 units 2 1,000 Hiring workers [Pengambilan pekerja] RM6 per unit 3 1,500 Laying off workers [Pembuangan pekerja] RM11 per unit 4 1,300 Unit cost [Kos unit] RM30 per unit With the information given, JAYB wants you to calculate the total cost of using chase strategy by hiring and layoff workers.
Define "what-if analysis." How can a spreadsheet be used to plan capacity?
WSS company makes weatherproof surveillance systems for parking lots. Demand estimates for the next four quarters are 25, 9, 13, and 17 units. Prepare an aggregate plan that uses inventory, regular time and overtime and back orders. Subcontracting is not allowed. Regular time capacity is 15 units for quarters 1 and 2, 18 units for quarters 3 and 4. Overtime capacity is 3 units per quarter. Regular time cost is $2000 per unit, while overtime cost is $3000 per unit. Back order cost is $300 per unit per quarter; inventory holding cost is $100 per unit per quarter. Beginning inventory is zero. Questions At the end of quarter 3, what is the ending inventory of finished systems? Answer: No ending Inventory =0 What is the total cost? 15*2000 + 6*2300 +4*2600 + 9*2000 + 13*2000 + 17*2000 =$132, 200 What is the average cost per unit? Answer 132200 / 64 = $2,066.
The president of Hill Enterprises, Terri Hill, projects the firm's aggregate demand requirements over the next 8 months as follows: January February March 1,600 1,700 1,800 April 1,700 Month 0 December 1 January 2 February 3 March Her operations manager is considering a new plan, which begins in January with 200 units of inventory on hand. Stockout cost of lost sales is $70 per unit. Inventory holding cost is $25 per unit per month. Ignore any idle-time costs. Evaluate the following plans D and E. 4 April 6 May 6 June Plan D: Keep the current workforce stable at producing 1,600 units per month. In addition to the regular production, another 20% of the normal production units can be produced in overtime at an additional cost of $55 per unit. A warehouse now constrains the maximum allowable inventory on hand to 600 units or less. Note: Do not produce in overtime if production or inventory are adequate to cover demand. 7 July 8 August Demand 1,500 1,700 1,800 1,700 2,100 2,100 1,800 1,500…
WSS company makes weatherproof surveillance systems for parking lots. Demand estimates for the next four quarters are 25, 9, 13, and 17 units. Prepare an aggregate plan that uses inventory, regular time, and over time, and backorders. Subcontracting is not allowed. The regular time capacity is 15 units for quarters 1 and 2, 18 units for quarters 3 and 4. Overtime capacity is 3 units per quarter. The regular time cost is $2000 per unit, while the overtime cost is $3000 per unit. Backorder costs $300 per unit per quarter; inventory holding costs $100 per unit per quarter. The beginning inventory is zero. How many total units will be produced in quarter 1 for delivery in quarter 1? How many units in total will be used to fill back orders over the four quarters? What is the cost to produce one unit in Quarter 4 using overtime to fill a back order in quarter one?
Capacity planning requires a demand forecast for an extended period of time into thefuture. What concerns would you have regarding an extended forecast as a capacityplanner?

SEE MORE QUESTIONS

Recommended textbooks for you

Marketing

ISBN:

9780357033791

Author:

Pride, William M

Publisher:

South Western Educational Publishing

Marketing

ISBN:

9780357033791

Author:

Pride, William M

Publisher:

South Western Educational Publishing

SEE MORE TEXTBOOKS