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Pre-Solve Analysis Capacity Reg - Time: 1250 Capacity Over - Time: 1250 Average Demands: Inventory VS Overtime VS Outsource: Minimize

The document provides production and demand data over a 12 month period and asks to determine the optimal production schedule with no backlogs, subcontracting, or new hires and the associated annual cost. It also asks if it would make sense for management to negotiate an increase in allowed overtime per employee per month from 20 to 40 hours and to explain the reasoning. The production schedule aims to minimize inventory levels and outsourcing costs by balancing regular and overtime production against fluctuating demand levels over the year.

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cvikasgupta
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51 views

Pre-Solve Analysis Capacity Reg - Time: 1250 Capacity Over - Time: 1250 Average Demands: Inventory VS Overtime VS Outsource: Minimize

The document provides production and demand data over a 12 month period and asks to determine the optimal production schedule with no backlogs, subcontracting, or new hires and the associated annual cost. It also asks if it would make sense for management to negotiate an increase in allowed overtime per employee per month from 20 to 40 hours and to explain the reasoning. The production schedule aims to minimize inventory levels and outsourcing costs by balancing regular and overtime production against fluctuating demand levels over the year.

Uploaded by

cvikasgupta
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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A.

Assuming zero backlogs, no subcontracting and no new hires, what is the optimum production
schedule and what is the annual cost of this schedule?

1 2 3 4 5 6
Demand
1000 1100 1000 1200 1500 1600

RT prod. 950 1200 1200 1200 1200 1200


OT prod. 50 150 150 150 150
Outsource
Inventory 50 0 150 500 650 500 250

7 8 9 10 11 12
Demand
1600 900 1100 800 1400 1700

RT prod. 1200 900 1100 1200 1200 1200


OT prod. 150 50 150 150
Outsource
Inventory 0 0 0 450 400 50

B. Does it make sense for management to negotiate an increase in allowed overtime per employee
per month from 20 hours to 40? Please explain.

Pre-solve analysis
Capacity Reg_time: 1250 160 60/10 = 1,200,000 units/ month
Capacity over_time: 1250 20 60/10 = 150,000 units/ month
Average Demands: 1,242,000 unit/month
Inventory VS Overtime VS Outsource: minimize outsource
Inventory: $20 + $20 + $3 t = $ 23.33 + 3t 6

Outsource: $40

Cost Comparison

No Inv. Const Prod Optimal


Material 276,000 292,880 298,000

RT Labor 43,500 47,833 45,833


OT Labor 3,750 1,470 5,750
Inventory 150 14,496 8,850
Outsouce 66,000 15,360 0
Total 389,400 372,039 358,433

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