MGMT717 Assignment 2 Solution and Discussion
SEMESTER FALL 2019
Advanced Production Planning and Inventory Control (MGMT717) ASSIGNMENT NO.02
Total Marks: 10 Scenario:
Due Date: 29th January, 2020
Wood Maestros, a furniture company has a product line of wooden tables. The raw material (wood, nails, glue etc.) used in all designs is the same and the only difference is in the designs of the tables. The designs are simple yet fascinating and it takes one and half hour to make a table of any design. The raw material cost for each table is same i.e. Rs.2000 per unit and each table is sold for Rs.3000.
The company has forecasted the demand of the tables for the next six month, given as follows: Month January February March April May June Demand 15000 20000 15000 25000 35000 10000
The company employs daily waged workers for the manufacturing process. The cost to hire and train a
worker is Rs.5000; whereas when a worker is fired, it costs Rs.8000 to the company.
The company operates 20 days in a month with an 8 hours shift daily. The workers are paid at the rate of Rs.100 per working hour. Any extra product is kept as inventory which incurs a holding cost of Rs.10 per unit per month. At times when the company is unable to fulfill demand, it faces a Backlog situation which costs the company Rs.200 per unit per month and this unmet demand is fulfilled from the production of the following month.
The supply chain manager is interested to know whether the Chase Strategy or the Level Strategy would be feasible for the company based on the total costs.
Being operations manager of the company, your objective is to decide a suitable strategy (either Level or Chase) based on the total costs if the beginning inventory and the workforce are zero.
You are required to calculate total cost for both strategies.
Show the necessary calculations in solution in a table form.
No theoretical definitions and explanations are required.
Watch video lectures and consult book/notes to complete the assignment
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