Practical Management Science
Practical Management Science
6th Edition
ISBN: 9781337406659
Author: WINSTON, Wayne L.
Publisher: Cengage,
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Zebra Technologies Corporation (ZTC) manufactures a number of navigation packages for pleasure boats. Their plant in Alabama wants to try a fixed production schedule for the next 6 months. When regular-time production and inventory cannot meet
demand, they plan on first using overtime, and if that is insufficient, they will subcontract out in order to meet demand. The forecast for the next 6 months and key production data are provided below.
Jan
Feb
Mar
Apr
Мay
Jun
Demand
700
600
400
650
850
1,000
Employees
Subcontracting Cost
Subcontracting Limit
Average Inventory Cost
Initial Inventory
Production Rate
65 units/month/employee
10
Production Cost
$100/units
$200/unit
Backorder Cost
$175/unit
200 units maximum
Overtime Cost
$150/unit
$20/unit/month
Overtime Limit
100 units
100 units
What would be the total cost of this plan?
Question 2
If management at ZTC is interested in a chase strategy using a hire/fire option, what is the total cost of this plan? They plan on using a policy where if the need were for 21.2 workers, they would hire 22 workers for that quarter. (Hint: this will impact regular
time production and inventory.)
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Transcribed Image Text:Zebra Technologies Corporation (ZTC) manufactures a number of navigation packages for pleasure boats. Their plant in Alabama wants to try a fixed production schedule for the next 6 months. When regular-time production and inventory cannot meet demand, they plan on first using overtime, and if that is insufficient, they will subcontract out in order to meet demand. The forecast for the next 6 months and key production data are provided below. Jan Feb Mar Apr Мay Jun Demand 700 600 400 650 850 1,000 Employees Subcontracting Cost Subcontracting Limit Average Inventory Cost Initial Inventory Production Rate 65 units/month/employee 10 Production Cost $100/units $200/unit Backorder Cost $175/unit 200 units maximum Overtime Cost $150/unit $20/unit/month Overtime Limit 100 units 100 units What would be the total cost of this plan? Question 2 If management at ZTC is interested in a chase strategy using a hire/fire option, what is the total cost of this plan? They plan on using a policy where if the need were for 21.2 workers, they would hire 22 workers for that quarter. (Hint: this will impact regular time production and inventory.)
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