Sales and Operations Plan

References:
Keep in mind that “pure” chase strategies do not use overtime. However, in a level-utilization strategy, the staffing is kept level, but production is varied to meet demand. In the level-utilization strategy, overtime is used for peak periods of demand to help keep the average level lower, and the desired inventory levels are the same as for the “pure” chase strategy.. All plans should seek to minimize the total cost of meeting your forecasted demand from the first part of the assignment.

Assignment Details (70 points total):
Given the operational data and constraints below, groups are to prepare, using the supplied form:

 (20 points) One optimized aggregate plan (Sales and Operations Plan) using the chase strategy.
 (20 points) One optimized aggregate plan (Sales and Operations Plan) using the level-utilization strategy.
 (20 points) One optimized aggregate plan (Sales and Operations Plan) using a mixed strategy.
 (15 points) An Executive Summary explaining your mixed plan in the context of the other three plans and constraints given.

 
Assignment 2Data:
Use the following monthly forecast to create your aggregate plans:
2013 Forecast:
Month Demand
1 6689
2 7094
3 9592
4 7458
5 8246
6 12300
7 12984
8 10153
9 9092
10 8875
11 7082
12 7500

 Assume 20 production days per month (4 weeks of 5 days each)
 The ending inventory (for December of 2012) is 3000 units
 Assume 0 units on Backorder at the end of 2012
 The number of Units produced by each worker is 200 units per month
 The desired safety stock level is 2000 units (you can only fall below this level to avoid having backorders, even in the Chase Strategy)
 Average pay applies for the first 40 hours an employee works in a week. Overtime pay applies for any time over 40 hours in a given week. The maximum level of overtime any employee can work in a month is 40 hours.
 You must employ whole people – there are no part time employees. (However, you can underutilize)
 Employees do not produce more per month than is required by the plan (ie- No efficiency gains), however than can under produce to satisfy the conditions of the type of plan that you choose.
 The firm wants exactly 4000 units to be left in inventory at the end of the fiscal year (after forecasted December 2013 demand is satisfied). This is a firm requirement for all plans.
 The staffing level at the beginning of 2014 is to be the same as the original staffing level given below (any staffing changes needed to achieve this are made after the forecasted December 2013 demand is satisfied). This is a firm requirement for all plans.
 Any backorder (negative on-hand inventory) is shown as a positive value in the backorder column instead of in the inventory column since it has a different monthly cost per unit. That is, if there is backorder for a period, there will be zero on-hand inventories for that period. Be sure to fulfill backorders as soon as possible in the plan.

 
Assignment 2 Cost Information Table:
Inventory holding cost $2 per unit per month based on ending inventory for month
Average pay rate $10 an hour
Overtime pay rate $15 an hour
Costs of hiring one additional employee $3000
Costs of firing one employee $2000
Original Staffing Level (12/2012) 21 employees
Material cost to produce one unit This cost in dollars per unit will be the average of the last two digits of the student ID numbers of all members of your group.
Backorder Costs $5 per unit per month held based on ending backorder level for month

Assignment 2 Operating Constraints Table:
Maximum inventory level 25,000 units due to limited warehouse capacity and increasing interest levels.
Maximum production capacity 20,000 units/month using regular time
Satisfying Demand Priorities Use Regular production time to meet demand if you can do so without violating the two previous constraints or the constraints of your plan type. After that, choose between using safety stock, anticipation inventory, Backorder or Overtime production. Choose the strategy that will lead to the lowest cost plan.