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COMM 225_ POM, W2012- SALES & OPERATIONS PLANNING (Ch. 14 and 14S) SOLUTIONS TO PRACTICE QUESTIONS Concordia University CA$17.30   Add to cart
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COMM 225_ POM, W2012- SALES & OPERATIONS PLANNING (Ch. 14 and 14S) SOLUTIONS TO PRACTICE QUESTIONS Concordia University

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COMM 225_ POM, W2012- SALES & OPERATIONS PLANNING (Ch. 14 and 14S) SOLUTIONS TO PRACTICE QUESTIONS Concordia University Q1 (Ref: Q. 14-1, p 637): Bioway, Inc., a manufacturer of medical supplies, uses aggregate planning to set labor and inventory levels for the year. While a variety of items ar...

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  • December 30, 2023
  • 7
  • 2023/2024
  • Exam (elaborations)
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  • comm 225
  • comm 225 pom w2012 sales operations planning

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COMM 225_ POM, W2012- SALES &
OPERATIONS PLANNING (Ch. 14 and 14S)
SOLUTIONS TO PRACTICE QUESTIONS
Concordia University 2024-2025

Q1 (Ref: Q. 14-1, p 637): Bioway, Inc., a manufacturer of medical supplies, uses aggregate planning to set labor
and inventory levels for the year. While a variety of items are produced, a standard kit composed of basic supplies
is used for planning purposes. Demand varies with seasonal illnesses and the quarterly ordering policies of
hospitals. The average worker at Bioway can produce 1000 kits a month at a cost of $9 per kit during regular
production hours and $10 a kit during overtime production. Completed kits can also be purchased from outside
suppliers at $12 each. Inventory carrying costs are $2 per kit per month. Overtime is limited to regular production,
but subcontracting is unlimited. Due to high quality standards and extensive training, hiring and firing costs are
$1500 per worker. Bioway currently employs 25 workers. Given the demand forecast below, develop a six-month
aggregate production plan for Bioway using
(a) Chase demand and
(b) A mixed strategy where the current workforce is kept for April through August, and supplemented with
overtime and subcontracting as needed.
Pure strategy – Chase Demand (Note: Level production is not feasible because of April’s demand)

Input: Beg. Wkrs 25 Regular $9 Hiring $1,500
Units/wkr 1000 Overtime $10 Firing $1,500 Cost: $2,457,000
Beg. Inv. 0 Subk $12 Inventory $2

Month Demand Reg OT Subk Inv #Wkrs #Hire #Fired
d
Apr 60,000 60,000 0 0 0 60 35 0
May 22,000 22,000 0 0 0 22 0 38
Jun 15,000 15,000 0 0 0 15 0 7
July 46,000 46,000 0 0 0 46 31 0
Aug 80,000 80,000 0 0 0 80 34 0
Sept 15,000 15,000 0 0 0 15 0 65
Total 238,000 238,000 0 0 0 100 110

Mixed Strategy – Keep current workforce and supplement with OT and Subk

Month Demand Reg OT Subk Inv #Wkrs #Hired #Fired
Apr 60,000 25,000 25,000 10,000 0 25 0 0
May 22,000 25,000 0 0 3,000 25 0 0
Jun 15,000 25,000 0 0 13,000 25 0 0
July 46,000 25,000 8,000 0 0 25 0 0
Aug 80,000 25,000 25,000 30,000 0 25 0 0
Sept 15,000 15,000 0 0 0 15 0 10
Total 238,000 140,000 58,000 40,000 16,000 0 10
Cost: $2,367,000

This is the optimum solution to the problem:

Month Demand Reg OT Subk Inv #Wkrs #Hired #Fired
Apr 60,000 32,600 27,400 0 0 33 8 0
May 22,000 32,600 0 0 10,600 33 0 0

, Jun 15,000 32,600 0 0 28,200 33 0 0
July 46,000 32,600 0 0 14,800 33 0 0
Aug 80,000 32,600 32,600 0 0 33 0 0
Sept 15,000 15,000 0 0 0 15 0 18
Total 238,000 178,000 60,000 0 53,600 8 18
Cost: $2,346,999

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