05 Jun GSCM 530 Week 2 Homework Assignment Page 459, Problems 4,6 and 8 NEW
Week 2
Homework Assignment – Page 459, Problems 4,6 and 8.
4. The current aggregate demand requirements for a firm are shown below for the next six months
Month May June July Aug Sept Oct
Demand 120 100 100 100 130 150
The firm always plans to meet all demand. The firm currently has 120 workers capable of producing 120 units in a month (1 unit/worker). The workforce can be increased (at a cost of $500 per worker) or decreased (at a cost of $1000 per worker). Inventory holding cost is $100 per unit per month. The firm currently has 40 units of inventory on hand, and it would like to have at least 40 units available at the end of each month. Regular production cost is $3,000 per unit.
a) What should the aggregate plan be if the inventory holding cost is to be minimized?
6. JokersRWild makes playing cards in several different styles, but a “standard” deck of
cards is used for planning purposes. The average worker at JokersRWild can make
10,000 sets of decks of cards per month at a cost of $1.00 per deck during regular
production and $1.30 during overtime. The company currently employs 25 workers.
Experience shows that it costs $500 to hire a worker and $500 to fire a worker. Inventory
carrying cost is $.25/ deck per month. Given the following demand estimate, develop a
six-month production plan based on level production, chase by changing workforce level, and chase using overtime (if they use overtime, they will not fire anyone and will allow inventory to increase if demand is less than regular production). The beginning inventory is 50,000 and at least that amount is desired each month.
8. Appliances Inc. is preparing an aggregate production plan for washers for next four months. The company’s expected monthly demand is given below in the chart. The company will have 500 washers in inventory at the beginning of the month and desired to maintain at least that number at the end of each month. Below is other critical data:
Production cost per unit = $300
Inventory Carrying cost per month per unit = $50 (based on ending month inventory)
Hiring Cost per worker = $1,000
Firing cost per worker = $2,000
Beginning # of workers = 10
Each worker can produce 100 units per month
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