Problem 1: Consider the following scenario:
Period Forecast demand Description Cost Max. Capacity
1 2000 Regular time: $17/unit 2200/period
2 1900 Overtime $29/unit 500/period
3 2500 Subcontracting *NONE AVAIL*
4 3000 Beginning inventory *NONE*
5 2800 Holding cost of inventory $4/unit/period
6 2500 Backorder cost $9/unit/period
Develop an aggregate plan and input all values below (you may use formulas as you wish):
You MUST end period 6 with no inventory and no backorders and the object is to minimize total cost.
Period Forecast demand Planned production Qty Reg time cost OT cost Ending Inv. Qty Backorder Qty Total Cost
1 2000
2 1900
3 2500
4 3000
5 2800
6 2500
Total cost, periods 1-6:
Problem 2: Given the following information for the “Miracle Widget” and assuming no structural variation in demand:
Week Sales Description Cost
1 21,020 Setup cost to produce $11,350
2 19,800 Holding cost/unit/year $22
3 17,560 Lead time 1 week
4 20,230 Lead time variation NONE
5 20,680 Expected back-order rate 2.00%
6 21,200
7 21,350
8 21,870
9 22,400
10 22,130
11 21,510
12 21,340
Calculate the following values:
Re-order point (DDLT + SS):
Economic order qty (EOQ):
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