Davy Reteno
Janice Spangenburg
BSOP 330: Master planning
May 23rd 2013
Assignment week 3:

Problem 13.3:
DATA
Period | Demand | Reg. Time | Overtime | Subcontract | | | | | | Period 1 | 1,400 | 1,600 | | | Period 2 | 1,600 | 1,400 | | | Period 3 | 1,800 | 1,600 | | | Period 4 | 1,800 | 1,800 | | | Period 5 | 2,200 | 1,800 | | | Period 6 | 2,200 | 2,200 | | | Period 7 | 1,800 | 2,200 | | | Period 8 | 1,400 | 1,800 | | | Total | 14,200 | 14,400 | 0 | 0 | Average | 1,775 | | | | Cost | | $115,200 | $0 | $0 | Total Cost | $207,200 | | | |

RESULT Period | Inventory | Holding | Shorting | Change | Increase | Decrease | | | | | | | | Period 1 | 400 | 400 | 0 | 0 | 0 | 0 | Period 2 | 200 | 200 | 0 | 200 | 0 | 200 | Period 3 | 0 | 0 | 0 | 200 | 200 | 0 | Period 4 | 0 | 0 | 0 | 200 | 200 | 0 | Period 5 | 400 | 0 | 400 | 0 | 0 | 0 | Period 6 | 400 | 0 | 400 | 400 | 400 | 0 | Period 7 | | | | | | | Period 8 | | | | | | | Total | | 600 | 800 | | 800 | 200 | Average | | | | | | | Cost | | $12,000 | $80,00 | | $0 | $0 |

This chase strategy would result in a $12,000 hit for excessive inventory in January and February. Also would accrue a hit of $80,000 due to shorting order in July and August period of cycle. Strategy would end up costing $207,200 dollars if carried out. If production would have met target in period 5 it would have saved the $80,000 hit and only accrued the $130,000 and production would have been up by 400 units. Cost of producing 400 more units in period 5 was $3,200.

Problem 13.5:
The average requirement is found by summing the total demand from January through August, and dividing the result 8 months to find 1,775 units per month.

Month | Demand | Production | Ending Inv. | Stock out | Cost | December | | | 200 | | | January