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Resource Planning - Exercise 3

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9 views

Resource Planning - Exercise 3

Uploaded by

nguyencongdanh18112004
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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3.

Demand and capacity (in units) are forecast as follows:

Capacity Source (units) Jan Feb Mar Apr May Jun July Aug
e

Regular time 235 255 290 300 300 290 300 290

Overtime 20 24 26 24 30 28 30 30

Subcontract 12 16 15 17 17 19 19 20

Demand 255 294 321 301 330 320 345 340

- The cost of producing each unit is 1000$ on regular time, 1300$ on overtime, and 1800$
on a subcontract. Inventory carrying cost is 200$ per unit per month. There are 10 units
beginning inventory in stock, and no backorders are permitted from period to period
- Let the production (workforce) vary by using regular time first, then overtime, and then
subcontracting.
a) Set up a production plan by producing exactly what the demand is each month. What
is this plan’s cost?

Capacity
Jan Feb Mar Apr May June July Aug Total
Source (units)

Demand 255 294 321 301 330 320 345 340 2506

Regular time 235 255 290 300 300 290 300 290 2260

Overtime 10 24 26 1 30 28 30 30 179

Subcontract 0 15 5 0 0 2 15 20 57

Total cost 2595300

b) Regular time can be set exactly the same amount, 275 units per month. If demand
cannot be met there is no cost assigned to shortages and they will not be filled. Does this alter
solution? Why?

Capacity
Jan Feb Mar Apr May June July Aug Total
Source (units)

Demand 255 294 321 301 330 320 345 340 2506
Regular time 275 275 275 275 275 275 275 275 2200
Overtime 0 0 26 24 30 28 30 30 168
Subcontract 0 0 9 2 17 17 19 20 84
Inventory 30 11 0 0 0 0 0 0 41
Total cost 2577800
We can see that the total cost in plan B is lower than the total cost in plan A. Moreover, if
regular time can be set exactly the same amount, it will be easier to manage. So, plan B
can be the alternative solution.
c) If overtime costs per unit rise from 1300$ to 1400$, will your answer to (a) change?
Why? What if overtime costs then fall to 1200$?
If overtime costs per unit rise from 1300$ to 1400$, the plan’s costs rise from 2595300 to
2613200. Because the capacity in regular time is not meet all demands in all months, so we
need to use overtime strategy. If overtime costs per unit from 1300$ to 1400$ , that mean the
plan’s cost is higher. It is similar in situation when overtime costs then fall to 1200$, the
plan’s costs fall to 2577400.

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