MPSTME, NMIMS

ASSIGNMENT NO. 3 Operations Management

10/09/2012

Submitted By: Bhavya Dosi (505), Harsh Gupta (506), Divy Prakash Shrivastava (504), Kushagra Agrawal (526), Prameet Gupta (507)

1.) The Glendale Electronics Store employs five people. Customer Traffic is highest on the weekends and

lowest during midweek. Accordingly, demand for employee help is given in the following table. Make

an employee work schedule that will meet staffing requirements and guarantee each employee two

consecutive days off per week.

Sol.)

DAYS

Monday Tuesday Wednesday Thursday Friday Saturday Sunday

Requirements 4 3 2 3 4 5 4

Adams 4 3 2 3 4 5 4

Chang 3 2 2 3 3 4 3

Klein 2 2 2 2 2 3 2

Ramirez 1 1 1 2 2 2 1

Sampson 0 1 1 1 1 1 0

Here 5 worker work for 25 worker days although slight different assignments may be equally satisfactory

The Schedule is

ADAM is assigned Wednesday & Thursday OFFs

CHANG is assigned Tuesday & Wednesday OFFs

KLEIN is assigned Thursday & Friday OFFs

RAMIREZ is assigned Tuesday & Wednesday OFFs

SIMPSON is assigned Sunday & Monday OFFs

2.) An item has a setup cost of $100 and a weekly holding cost of $0.50 per unit. Given the following net

requirements, what should the lot sizes be using Lot-for-Lot (L4L), economic order quantity (EOQ) and

least total cost (LTC)? Also what is the total cost associated with each lot sizing?

WEEKS Net Requirements

1 10 2 30

3 10 4 50

5 20 6 40

7 50

8 30

Sol.)

LOT-4-LOT (L4L)

Week Net Requirements

Production Quantity

Ending Inventory

Holding Cost

Setup Cost

Total Cost

1 10 10 0 0 100 100 2 30 30 0 0 100 200

3 10 10 0 0 100 300 4 50 50 0 0 100 400

5 20 20 0 0 100 500

6 40 40 0 0 100 600 7 50 50 0 0 100 700

8 30 30 0 0 100 800

ECONOMIC ORDER QUANTITY

Annual Holding Cost, H = 0.50 * 52

= $26 per unit

Setup Cost, S = $100

E= ((2DS)/ H)

= 110 units

Week Net Requirements

Production Quantity

Ending Inventory

Holding Cost

Setup Cost

Total Cost

1 10 110 100 50 100 150

2 30 0 70 35 100 135 3 10 0 60 30 100 130

4 50 0 10 5 100 105

5 20 110 100 50 100 150 6 40 0 60 30 100 130

7 50 0 10 5 100 105 8 30 110 90 45 100 145

Que 3. Develop a production plan and calculate the annual cost for a firm whose demand forecast is

fall, 10,000; winter, 8,000; spring, 7,000; summer, 12,000. Inventory at the beginning off all is 500

units. At the beginning of fall you currently have 30 workers, but you plan to hire temporary workers

at the beginning of summer and lay them off at the end of the summer. In addition, you have

negotiated with the union an option to use the regular workforce on overtime during winter or

spring if overtime is necessary to prevent stock outs at the end of those quarters. Overtime is not

available during the fall. Relevant costs are: hiring, $100 for each temp; layoff, $200 for each worker

laid off; inventory holding, $5 per unit-quarter; backorder, $10 per unit; straight time, $5 per hour;

overtime, $8 per hour. Assume that the productivity is 0.5 units per worker hour, with eight hours

per day and 60 days per season.

Solution:

Productivity = 0.5 units/hour, 8 hours/day, 60 days/season

Labor RT = $5/hour, OT = $8/hour

RT unit cost = $5/0.5 units = $10/unit

OT unit cost = $8/0.5 units = $16/unit

Inventory holding = $5/unit/quarter, Backorder = $10/unit

Hiring = $100/worker, Firing = $200/worker, Fall Inventory = 500 units

Number of units produced by 1 worker in one season = 0.5*8*60 = 240 units

Que: Plan production for the next year. The demand forecast is spring, 20,000; summer, 10,000; fall,

15,000; winter, 18,000. At the beginning of spring you have 70 workers and 1,000 units in inventory.

The union contract specifies that you may lay off workers only once a year, at the beginning of

summer. Also, you may hire new workers only at the end of summer to begin regular work in the

fall. The number of workers laid off at the beginning of summer and the number hired at the end of

summer should result in planned production levels for summer and fall that equal the demand

forecasts for summer and fall, respectively. If demand exceeds supply, use overtime in spring only,

which means that backorders could occur in winter. You are given these costs: hiring, $100 per new

workers; layoff, $200 per worker laid off; holding, $20 per unit-quarter, backorder cost, $8 per unit;

straight-time labor, $10 per hour; overtime, $15 per hour. Productivity is 0.5 units per worker hour,

eight hours per day, 50 days per quarter. Find the total cost.

Solution:

Productivity = 0.5 units/hour, 8 hours/day, 50 days/season

Labor RT = $10/hour, OT = $15/hour

RT unit cost = $10/0.5 units = $20/unit, OT unit cost = $15/0.5 units = $30/unit

Inventory holding = $20/unit/quarter, Backorder = $8/unit

Hiring = $100/worker, Firing = $200/worker, Spring Inventory = 1,000 units

Number of units produced by 1 worker in one season = 0.5*8*50 = 200 units

*Laid off 20 workers at the beginning of summer

** Hired 20 workers at the end of summer to begin regular work in the fall

*** Hired 25 workers at the end of summer to begin regular work in the fall