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 Requirements Adams Chang Klein Ramirez Sampson 4 4 3 2 1 0 Tuesday 3 3 2 2 1 1 Wednesday 2 2 2 2 1 1 Thursday 3 3 3 2 2 1 Friday 4 4 3 2 2 1 Saturday 5 5 4 3 2 1 Sunday 4 4 3 2 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 1 2 3 4 5 6 7 8 Sol.) LOT-4-LOT (L4L) Week 1 2 3 4 5 6 7 8 Net Requirements 10 30 10 50 20 40 50 30 Production Quantity 10 30 10 50 20 40 50 30 Ending Inventory 0 0 0 0 0 0 0 0 Holding Cost 0 0 0 0 0 0 0 0 Setup Cost 100 100 100 100 100 100 100 100 Total Cost 100 200 300 400 500 600 700 800 Net Requirements 10 30 10 50 20 40 50 30

ECONOMIC ORDER QUANTITY Annual Holding Cost, H = 0.50 * 52 = $26 per unit Setup Cost, S = $100 E= ((2DS)/ H) = 110 units Week 1 2 3 4 5 6 7 8 Net Requirements 10 30 10 50 20 40 50 30 Production Quantity 110 0 0 0 110 0 0 110 Ending Inventory 100 70 60 10 100 60 10 90 Holding Cost 50 35 30 5 50 30 5 45 Setup Cost 100 100 100 100 100 100 100 100 Total Cost 150 135 130 105 150 130 105 145

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