TEXAS SOUTHERN UNIVERSIDTY

Operations Management II

Exam 2

User

11/20/2015

The Bishop Health and Beauty Products has developed a new shampoo, and need you to develop its aggregate schedule. The cost accounting department has supplied you with costs and other data relevant to the aggregate plan. The company produces shampoo, 8 hours/day, 62 days per quarter. Assume that the quarterly demand pattern repeats from year to year.

Demand

Quarter

(Cases)

Costs

1

1,400

Beg Inv.

100

2

1,200

Back order

$50/case

3

1,500

Holding

$10/case/Qtr.

4

1,300

Hiring Wkr

$600/wkr.

Layoff Wkr.

$400/wkr.

Labor

Standard

12.4 hrs./case

Subcontract

$150/case

                 (Use this data for Problems 1,2,and 3)

1. Develop a level aggregate plan with inventories and the corresponding cost.
2. Develop a chase or match  aggregate plan with hiring and laying off employees and corresponding cost. (Hint: Workers at the beginning of Quarter 1 are the same as those in Quarter 4 of previous year).
3. Develop an aggregate plan with production set at the minimum quarterly demand with back orders and subcontracts and its  corresponding cost. Back orders are limited to no more than 100 units per quarter.

4.

A firm wishes to develop an aggregate plan for the next 3 periods (January, February and March).

Demand is for 1200 units in January, 1400 in February and 1600 in March. The firm has 4 planning strategies at hand – inventories, regular time, overtime and subcontract. They have 50 units of beginning inventory and the capacity to produce 900 units with regular time per month, 300 units with overtime monthly and the ability to subcontract 1000 units monthly. Cost data is as follows:

Regular time cost = $75/unit

Overtime cost    =     $112.5/unit

Subcontract cost =$120/unit

Inventory Carrying cost = $6 per month/unit

Assuming that back orders are not permitted, set up a production plan that minimizes cost using the transportation method.