TEXAS SOUTHERN UNIVERSIDTY
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)
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.