Class name : Engineering Supply Chain / Main Text: • Sunil Chopra, Supply Chain Management, Strategy, Planning, and Operation, 7 th Edition, Pearson, 2019 https://www.vitalsource.com/products/supply
Assignment 6 The assignment has 7 parts in 3 sections. Provide you r models for each section (three different models ), in a separate sheet . Use a nother sheet to provide the answers and comments (Le t’s call it “the answer sh eet ”). FlexMan produce s two product categories: routers and switches. Consultation with customers has indicated a demand forecast for each category over the next 12 months (in thousands of units) as show n in the table below. Demand Forecast for Flex Man Month Router Demand Switch Demand January 1700 1700 February 1600 1500 March 2700 1500 April 2500 2000 May 800 1500 June 1800 900 July 1200 700 August 1400 800 September 2500 1400 October 30 00 20 00 November 1000 800 December 1000 900 Manufacturing is primarily an assembly operation, and capacity is governed by the number of people on the production line. The plant operates 20 days a month, 8 hours each day.Production of a router takes 20 minutes, and production of a switch requires 10 minutes of worker time. Each worker is paid $10 per hour, with a 50 percent premium for any overtime.
The plant currently has 6, 25 0 employees. Overtime is limited to 20 hours per employee per month. The plant currently maintains 100,000 routers and 10 0,000 switches in inventory. The cost of holding a router in inventory is $ 3 per month, and the cost of holding a switch in inventory is $1 per month. The holding cost arises because products are paid for by the customer at existing market rates when purchased. Thus, if FlexMan produces early and holds in inventory, the company re covers less given the rapidly dropping component prices. Section I a) Assuming no backlogs, no subcontracting, no layoffs, and no new hires, what is the optimum production schedule for FlexMan (Model 1 )? b) What is the annual cost of this schedule (report it in the answer sheet) ? c) Is there any value for management to negotiate an increase of allowed overtime per employee per month from 20 hours to 40 (provide the comment in the answer sheet) ? What variables are affected by this change (report it in the answer sheet) ? d) Reconsider parts (b) and ( c) if FlexMan starts with only 5, 75 0 employees. What happens to the value of additional overtime as the workforce size decreases (provide the comment in the answer sheet) ? Section II The firm is considering the option of changing workforce size with demand. The cost of hiring a new employee is $7 50 and the cost of a layoff is $1,000. Anticipating a similar demand pattern next year, FlexMan aims to end the year with 6, 25 0 employees. e) What is the optimal production, hiring, and layoff schedule (Model 2) ? f) What is the cost of such a schedule (report it in the answer sheet) ? Section III FlexMan has identified a third party that is willing to produce routers and switches as needed. The third party will charge $6 per router and $ 3 per switch. Assume all other data as in Section I , and assume hiring and layoffs are allowed as in Section II. g) How should FlexMan use the third party (Model 3 - provide the comment in the answer sheet )?
