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Production Plan 3: Constant Low Workforce Subcontract

This document provides information needed for aggregate production planning over a 6 month period, including beginning inventory, demand forecasts, safety stock calculations, production requirements, and the costs associated with 4 different production plans. Plan 1 varies the workforce each month to meet exact production requirements, while Plan 3 keeps a constant low workforce and subcontracts any excess demand. Plan 1 results in total costs of $252,121 compared to $175,862 for Plan 3 due to lower hiring, layoff and overtime costs when subcontracting is used.

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119 views1 page

Production Plan 3: Constant Low Workforce Subcontract

This document provides information needed for aggregate production planning over a 6 month period, including beginning inventory, demand forecasts, safety stock calculations, production requirements, and the costs associated with 4 different production plans. Plan 1 varies the workforce each month to meet exact production requirements, while Plan 3 keeps a constant low workforce and subcontracts any excess demand. Plan 1 results in total costs of $252,121 compared to $175,862 for Plan 3 due to lower hiring, layoff and overtime costs when subcontracting is used.

Uploaded by

ヅウィ プトリ
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
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Beginning Inventory

Demand Forecast
Number of Working Days by Month

January
550
2000
25

Costs
Materials
Inventory holding cost
Marginal cost of stockout
Marginal cost of subcontracting
Hiring and training cost
Layoff cost
Labor hours required per unit
Straight-line cost (first eight hours each day)
Overtime cost (time and a half)

$200.00
$3.00
$5.00
$10.00
$100.00
$150.00
4.0
$6.00
$9.00

February

March

April

May

June

Totals

1000
20

1800
24

2200
24

1500
25

1700
23

10200
141

April
450
2,200
550
2,300
550

May
550
1,500
375
1,325
375

June
375
1,700
425
1,750
425

May
1,325
5,300
25
200
27

June
1,750
7,000
23
184
38
12
$1,154

$4,071

$42,000
Total Cost

$6,250
$241,800
$252,121

$ per unit
$ per unit per month
$ per unit per month
$ per unit
$ per worker
$ per worker
$ per unit
$ per hour
$ per hour

Aggregate Production Planning Requirements


Beginning Inventory
Demand Forecast
Safety Stock (.25 x Demand Forecast)
Production Requirement
Ending Inventory

January
550
2,000
500
1,950
500

February
500
1,000
250
750
250

March
250
1,800
450
2,000
450

10,075

Costs of Four Production Plans


Production Plan 1: Exact Production; Vary Workforce
January February
March
April
1,950
750
2,000
2,300
Production Requirement
7,800
3,000
8,000
9,200
Production Hours Required
25
20
24
24
Working Days per Month
200
160
192
192
Hours per Month per Worker
39
19
42
48
Workers Required
23
6
New Workers Hired
$2,292
$625
Hiring Cost
20
Workers Laid Off
$3,038
Layoff Cost (Workers Laid Off x $250)
$46,800
$18,000
$48,000
$55,200
Straight Time Cost

21
$3,213
$31,800

Total

Production Plan 3: Constant Low Workforce; Subcontract


Production Requirement
Working Day per Month
Production Hours Available (Working Day x 8
Hrs./Day x jumlah Workers)*
Actual Production (Production Hours Available/4
hr.per Unit)
Units Subcontracted (Production Requirement Actual Production)
Subcontracting Cost (Units Subcontracted x
biaya subcontract)
Straight Time Cost

January February
1,950
750
25
20

May
1,325
25

June
1,750
23

Total

3,040

3,648

3,648

3,800

3,496

950

760

912

912

950

874

1,000

-10

1,088

1,388

375

876

$10,000

$0

$10,880

$13,880

$3,750

$8,760

$47,270

$22,800

$18,240

$21,888

$21,888

$22,800

$20,976
Total Cost

$128,592
$175,862

Plan 1
$4,071
$6,250
$0
$0
$0
$0
$241,800
$252,121

Plan 3
$0
$0
$0
$0
$47,270
$0
$128,592
$175,862

Comparison of Two Plans


Cost

April
2,300
24

3,800

*Minimum production requirement.

Hiring
Layoff
Excess inventory
Shortage
Subconstract
Overtime
Straight time

March
2,000
24

Month
January
February

Worker
39
18.75

March

41.66667

April

47.91667

May
June

26.5
38.04348

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