Question

In: Operations Management

Expected demands for next 5 weeks for Plant A are given as:       Week:                    1        

Expected demands for next 5 weeks for Plant A are given as:

      Week:                    1                      2                      3                      4                      5

      Demand:               12000              7000                9500                11000              8000 (units)

      Desired capacity of Plant A is 10000 units/week. Plant manager wants that the average

      inventory must be less than 500 (units) and the average utilization of plant is above 80%.

      The beginning inventory is 2000. (8 points)

      a) Complete the following MPS with given information. (4 points)

      Week:                    1                      2                      3                      4                     5

      --------                    -------            ---------            ---------           ---------            --------

      Master Schedule: 10000              _____             10000              10000              8000

      Demand:               12000              7000                9500                11000              8000

      Ending Inventory: _____             500                  _____              0                      _____

            b) Does this schedule satisfy the manager's objective? Why?

Solutions

Expert Solution

Week

Demand

1

12000

2

7000

3

9500

4

11000

5

8000

Beginning Inventory = 2000

Desired capacity of plant = 10000 units per week

Average utilization should be above 80%.

As we have 2000 units in beginning inventory

For Week – 1:

Demand = 12000

Beginning Inventory = 2000

Master Production = 10000

Ending Inventory = (beginning inventory + master production) – Demand = (2000 + 10000) – 12000 = 0

Ending Inventory = 0

For Week – 2:

Demand = 7000

Beginning Inventory = Ending Inventory of Week 1 = 0

Ending Inventory = 500

Hence Master Production = Demand – Beginning Inventory + Ending Inventory = 7000 – 0 + 500 = 7500 units

For Week – 3:

Demand = 9500

Beginning Inventory = Ending Inventory of Week 2 = 500

Master Schedule = 10000

Ending Inventory = (beginning inventory + master production) – Demand = (500 + 10000) – 9500 = 10500 – 9500 = 1000 units

For Week – 4:

Demand = 11000

Beginning Inventory = Ending inventory of week 3 = 1000 units

Master Schedule = 10000 units

Ending Inventory = (beginning inventory + master production) – Demand = (1000 + 10000) – 11000 = 0

For Week – 5:

Demand = 8000 units

Beginning Inventory = 0

Master schedule = 8000 units

Ending Inventory = (beginning inventory + master production) – Demand = 8000 – 8000 = 0 units

Now the chart:

Week:

1

2

3

4

5

Beginning Inventory

2000

0

500

1000

0

Master Schedule

10000

7500

10000

10000

8000

Demand

12000

7000

9500

11000

8000

Ending Inventory

0

500

1000

0

0

Average Inventory = (beginning + ending)/2

1000

250

750

500

0

The utilization:

Total Master Schedule Production = sum of master schedule of all weeks

= 10000 + 7500 + 10000 + 10000 + 8000 = 45500

Capacity in 5 weeks = 5*capacity per week = 5*10000 = 50000

Hence utilization = (master schedule production/capacity)*100% = (45500/50000)*100% = 0.91*100 = 91%

Utilization = 91%

Average Inventory = (beginning inventory + ending inventory)/2

From the above chart, we can see that the average inventory varies.

The average inventory of the whole period = (beginning inventory of week 1 + ending inventory of week 5)/2

= (2000 + 0)/2

= 1000 units

The plant manager desires to have less than 500 units of average inventory and have at least 80% utilization.

Here the average inventory is 1000 units (which don’t satisfy the case)

Here the utilization is 91% (which satisfies the case)

Hence, the manager’s objective has not been satisfied by this schedule. The utilization objective has been achieved but the average inventory doesn’t satisfy.

IF YOU LIKE THE ANSWER, PLEASE GIVE AN UP-VOTE OR THUMB UP. THIS WILL ENCOURAGE ME TO ANSWER MORE!!


Related Solutions

Given the projected demands for the next six months, prepare an aggregate plan that uses inventory,...
Given the projected demands for the next six months, prepare an aggregate plan that uses inventory, regular time, overtime, subcontract and backorders. Regular time is limited to 170 units per month (Cost per Unit = $40 ). Overtime is limited to a maximum of 20 units per month (Cost per Unit =$60). Units purchased from the subcontractor (Cost per Unit = $72 ) cannot exceed 30 per month and the total purchases from the subcontractor over the 6 month period...
Aggregate Planning Given the projected demands for the next six months, prepare an aggregate plan that...
Aggregate Planning Given the projected demands for the next six months, prepare an aggregate plan that uses inventory, regular time, overtime, subcontract and backorders. Regular time is limited to 150 units per month (Cost per Unit = $20 ). Overtime is limited to a maximum of 30 units per month (Cost per Unit =$30). Units purchased from the subcontractor (Cost per Unit = $26 ) cannot exceed 40 per month and the total purchases from the subcontractor over the 6...
Given the projected demands for the next six months, prepare an aggregate plan that uses inventory,...
Given the projected demands for the next six months, prepare an aggregate plan that uses inventory, regular time and overtime, and backorders. The plan must wind up with no units in ending inventory in Period 6. Regular time capacity is 150 units per month. Overtime capacity is 20 units per month. Overtime cost is $30 per unit, backorder cost is $20 per unit, inventory holding cost is $5 per unit, regular time cost of $20 per unit, and beginning inventory...
Given the projected demands for the next six months, prepare an aggregate plan that uses inventory,...
Given the projected demands for the next six months, prepare an aggregate plan that uses inventory, regular time and overtime, and backorders. A level production cost rate of 150 units per month will be used. Backorder cost is $20 per unit, inventory holding cost is $5 per unit, regular time cost of $20 per unit, and beginning inventory is zero. Month Forecast 1 190 2 150 3 150 4 150 5 120 6 140 What is the cost of this...
1.      Two independent forecasting methods have been used each week for the past 5 weeks. The...
1.      Two independent forecasting methods have been used each week for the past 5 weeks. The forecasts and actual sales are as follows. Week Actual Sales (number of units) Sales Forecasts (number of units) Method 1 Method 2 Five weeks ago 20 18 21 Four weeks ago 19 19 20 Three weeks ago 21 20 19 Two weeks ago 18 19 17 Last week 22 23 22 a.      Calculate the Mean Absolute Deviation (MAD) measures for forecasting methods 1 and...
ANSWER 5-7 1. John is a 10-week-old male who was born at 28 weeks gestation and...
ANSWER 5-7 1. John is a 10-week-old male who was born at 28 weeks gestation and weighed 0.8 kg (1 pounds, 12.2 ounces) at birth. His Neonatal ICU stay was essentially uneventful. John has an older sister, Jane, who just started preschool. Last week Jane was ill with a respiratory infection, and now John is starting to seem ill as well. He initially became ill with a runny nose, sneezing, coughing, and wheezing, and he has not been breastfeeding well....
3. The expected dividend next year is $1.30 and dividends are expected to grow at 5%...
3. The expected dividend next year is $1.30 and dividends are expected to grow at 5% forever. What is the value of this promised dividend stream if the discount rate is a) 8% b) 5% c) 3%
Lebbo Ltd is considering investment in a new plant costing $5 million. The plant is expected...
Lebbo Ltd is considering investment in a new plant costing $5 million. The plant is expected to generate sales of $4 million per year for its estimated life of eight years. Sale revenue increases 5% each year. Costs of sales are expected to be 40% of sales. For depreciation purposes the plant will be written down, on a straight line basis, to 20% of its original cost by the end of the project. The company evaluates projects on the basis...
Suppose the demands in successive weeks for your product are normally distributed with mean 100 and...
Suppose the demands in successive weeks for your product are normally distributed with mean 100 and standard deviation 20 and suppose your lead time for receiving a placed order is three weeks. A quantity of interest to managers is the lead-time demand, the total demanded over three weeks. Why does the formula for the standard deviation of lead-time demand include a square root of 3? What assumptions are behind this?
An electrical contractor's records during the last 5 weeks indicate the number of job requests: week...
An electrical contractor's records during the last 5 weeks indicate the number of job requests: week actual requests 1 20 2 22 3 18 4 21 5 22 Compute the MAD, MAPE, and MSE for the two-period moving average and Naïve models and compare your results. Explain which of the two forecasting models you prefer and why. week actual requests MA2(forecast) Naive(forecast) MA2(MAD) Naive(MAD) MA2(MSE) Naive(MSE) MA2(MAPE) Naive(MAPE) 1 20 2 22 3 18 4 21 5 22 NEED THE...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT