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Problem 2. You are supplied with a monthly demand forecast, an organizational policy of requiring 10% of a month's forecast as safety stock, and the number of operating days available each month. There is no inventory available at the beginning of the first month, January. The following table contains the demand requirements. 1. Beginning inventory 2. Forecasted demand 3. Safety Stock 4. 56 5. Production requirements (2+3-1) Operating days 6. Cumulative forecasted demand 7. 8. January 0 10,000 1,000 11,000 22 10,000 Cumulative production 11,000 requirements Cumulative operating days 22 February 1,000 15,000 1,500 3,000 2,700 3,000 March April May June 2,700 3,000 1,500 3,000 30,000 27,000 30,000 16,000 1,600 15,500 31,500 19 21 25,000 55,000 26,500 58,000 41 62 26,700 21 82,000 112,000 84,000 115,000 129,600 30,300 22 83 105 14,600 20 128,000 125

Problem 2. You are supplied with a monthly demand forecast, an organizational policy of requiring 10% of a month's forecast as safety stock, and the number of operating days available each month. There is no inventory available at the beginning of the first month, January. The following table contains the demand requirements. 1. Beginning inventory 2. Forecasted demand 3. Safety Stock 4. 56 5. Production requirements (2+3-1) Operating days 6. Cumulative forecasted demand 7. 8. January 0 10,000 1,000 11,000 22 10,000 Cumulative production 11,000 requirements Cumulative operating days 22 February 1,000 15,000 1,500 3,000 2,700 3,000 March April May June 2,700 3,000 1,500 3,000 30,000 27,000 30,000 16,000 1,600 15,500 31,500 19 21 25,000 55,000 26,500 58,000 41 62 26,700 21 82,000 112,000 84,000 115,000 129,600 30,300 22 83 105 14,600 20 128,000 125

Practical Management Science
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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Problem 2. You are supplied with a monthly demand forecast, an organizational policy of requiring 10% of a month's forecast as safety stock, and the number of operating days available each month. There is no inventory available at the beginning of the first month, January. The following table contains the demand requirements. 2. 3. 4. 5. 6. 7. 8. Beginning inventory Forecasted demand January 0 10,000 1,000 Safety Stock Production requirements (2+3-1) Operating days Cumulative forecasted demand Cumulative production 11,000 requirements Cumulative operating days 11,000 22 10,000 22 February March April May 1,000 1,500 3,000 2,700 15,000 30,000 27,000 30,000 1,500 3,000 2,700 3,000 15,500 19 25,000 31,500 26,700 30,300 21 22 21 82,000 112,000 55,000 26,500 58,000 84,000 115,000 129,600 41 62 83 June 3,000 16,000 1,600 105 14,600 20 128,000 125
Transcribed Image Text:Problem 2. You are supplied with a monthly demand forecast, an organizational policy of requiring 10% of a month's forecast as safety stock, and the number of operating days available each month. There is no inventory available at the beginning of the first month, January. The following table contains the demand requirements. 2. 3. 4. 5. 6. 7. 8. Beginning inventory Forecasted demand January 0 10,000 1,000 Safety Stock Production requirements (2+3-1) Operating days Cumulative forecasted demand Cumulative production 11,000 requirements Cumulative operating days 11,000 22 10,000 22 February March April May 1,000 1,500 3,000 2,700 15,000 30,000 27,000 30,000 1,500 3,000 2,700 3,000 15,500 19 25,000 31,500 26,700 30,300 21 22 21 82,000 112,000 55,000 26,500 58,000 84,000 115,000 129,600 41 62 83 June 3,000 16,000 1,600 105 14,600 20 128,000 125
The costs for the organization are as follows: Manufacturing cost/unit Inventory holding costª Hourly wage rate Stockout cost per unit Hourly overtime wage rate Subcontracting cost/unit Labour hours/unit Layoff cost/worker Hiring and training cost/worker 22% of manufacturing cost per month. Rs.100 Rs.2.00/unit-month Rs.8.00 Rs.5.00 150%, or Rs.12.00 Rs.104 4 hours Rs.500 Rs.400 Three potential plans for the production are: 1. Produce to exact production requirements by varying the size of the work force on regular hours. Assume there are 250 workers available in January. 2. Maintain a constant work force of 518 workers. Assume no subcontracting is available and inventory will fluctuate with stockouts filled from the following month's production. 3. Produce with a fixed work force of 500 on regular time and subcontract all excess demand over the period of production. Inventory will increase when production exceeds demand; no stockouts are permitted.
Transcribed Image Text:The costs for the organization are as follows: Manufacturing cost/unit Inventory holding costª Hourly wage rate Stockout cost per unit Hourly overtime wage rate Subcontracting cost/unit Labour hours/unit Layoff cost/worker Hiring and training cost/worker 22% of manufacturing cost per month. Rs.100 Rs.2.00/unit-month Rs.8.00 Rs.5.00 150%, or Rs.12.00 Rs.104 4 hours Rs.500 Rs.400 Three potential plans for the production are: 1. Produce to exact production requirements by varying the size of the work force on regular hours. Assume there are 250 workers available in January. 2. Maintain a constant work force of 518 workers. Assume no subcontracting is available and inventory will fluctuate with stockouts filled from the following month's production. 3. Produce with a fixed work force of 500 on regular time and subcontract all excess demand over the period of production. Inventory will increase when production exceeds demand; no stockouts are permitted.
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