Chapter 13 problems 13.3:
The president of Hill Enterprises, Terri Hill, projects the firm’s aggregate demand requirements over the next 8 months as follows:
Her operations manager is considering a new plan, which begins in January with 200 units on hand. Stockout cost of lost sales is $100 per unit. Inventory holding cost is $20 per unit per month. Ignore any idle-time costs. The plan is called plan A.
Plan A: Vary the workforce level to execute a “chase” strategy by producing the quantity demanded in the prior month. The December demand and rate of production are both 1,600 units per month. The cost of hiring additional workers is $5,000 per 100 units. The cost of laying off workers is $7,500 per 100 units. Evaluate this plan.
Chapter 13 problems 13.5:
Hill is now considering plan C. Beginning inventory, stockout costs, and holding costs are provided in Problem 13.3:
a) Plan C: Keep a stable workforce by maintaining a constant production rate equal to the average requirements and allow varying inventory levels.
b) Plot the demand with a graph that also shows average requirements. Conduct your analysis for January through August. Chapter 13 problems 13.9:
Mary Rhodes, operations manager at Kansas Furniture, has received the following estimates of demand requirements:
July Aug. Sept. Oct. Nov. Dec.
1,000 1,200 1,400 1,800 1,800 1,600
a) Assuming stockout costs for lost sales of $100 per unit, inventory carrying costs of $25 per unit per month, and zero beginning and ending inventory, evaluate these two plans on an incremental cost basis:
• Plan A: Produce at a steady rate (equal to
