BA 357: Summer 2017

Work Assignment 1

60 Points

General:

Assignment 1will be uploaded as a completed Excel filein response to the assignment posted in the Week 5Assignment Folder in Canvas. The file upload must be completed before11:59 PMPDT on Thursday, 8/3. This assignment can be completed with a group of up to five students or alone. If you complete it with a group, pick one team member to upload the completed file and include all of your names on the file. A discussion board is available for the arrangement of groups and for asking questions about the assignment.

References:

Chapter 10 and the associated PowerPoint, as well as the aggregate plan example file which is attached to the Sales and Operations material in Canvas (Week 5 Folder.) Keep in mind that “pure” chase strategies do not use overtime. However, in a level-utilizationstrategy 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. In the level-inventory strategy, anticipation inventory is the primary tool to maintain level staffing. All plans should seek to minimize the total cost of meeting the forecasted demandin the assignment.

Assignment Details (60 points total):

Given the operational data and constraints below, using the supplied form:

  • (15 points) One optimized aggregate plan (Sales and Operations Plan) using the chase strategy.
  • (15 points) One optimized aggregate plan (Sales and Operations Plan) using the level-inventory strategy.
  • (15 points) One optimized aggregate plan (Sales and Operations Plan) using the level-utilization strategy.
  • (15 points) An Executive Summary explaining your chosen plan in the context of the other plans and constraints given. Analysis should be both quantitative and qualitative.

Your submitted plan will comply with all operating constraints specified in the operational data given below. Plan total costs are to include appropriate end-of-the-year adjustments to return to the desired staffing and ending inventory levels specified in the following Data section.

Assignment Details:

All three plans will be completed using the provided forecast,fill in the summary sheet with a half-page executive summary explaining your choicesin your chosen plan. Include the recommended plan’s total annual cost and cost per unit shipped. Your analysis should include quantitative factors (i.e.- Total Cost) and qualitative factors (i.e.- effects on morale and productivity)that drove your decision.

There is an Excel template in the assignment 1 item in Canvas. The completed assignment file should consist of four sheets in the supplied Excel template in the following order:

Your name(s)and the executive summary with recommended plan cost and cost per unit shipped

Your Chase Plan

Your Level-Inventory Plan

Your Level-Utilization Plan

Plan formats: You are to use the spreadsheet template for your assignment. This form is now available as an Excel file in the Assignment 1item in Canvas.

  • Your aggregate plan is to be completed on its designated sheet. There will be sufficient space below the spreadsheet form for you to add any comments or explanations you care to add regarding your plans.
    Values within the main body of the spreadsheets (demand, production rates, staffing levels, etc.) are to be number of units or people (not $). They are to be expressed in whole numbers (no decimal values). Cost calculations will appear in the designated row at the bottom and the rightmost column of each spreadsheet only. Cost calculations, of course, will need to retain at least 2 decimal points (cents) but whole $ should be reported. The sum of the blue cells in the bottom row and the sum of the cells in the rightmost column should both equal the total cost of your aggregate plan and should be reported in the green cell in the lower right corner.
  • Enter the executive summary in the text box on the first sheet
  • Do not make the reader guess what you are doing – you can include explanations on each page, if needed.
  • Required format for aggregate plans is in the provide template.

Assignment 1Data:

Use the following monthly forecast to create your aggregate plans:

2017 Forecast:

Month / Demand
1 / 6502
2 / 6094
3 / 9043
4 / 9912
5 / 10246
6 / 11647
7 / 13923
8 / 12987
9 / 11483
10 / 9875
11 / 5082
12 / 6524
  • Assume 20 production days per month (4 weeks of 5 days each)
  • The ending inventory (for December of 2016) is 0 units
  • Assume 350 units on Backorder at the end of 2016
  • The number of Units produced by each worker is250 units per month
  • The desired safety stock level is 1500 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 employwhole people – there are no part time employees. (However, you can underutilize in all plan types)
  • Employees do not produce more per month than is required by the plan (ie- No efficiency gains, production remains at 250 per worker per month), however than can under produce to satisfy the conditions of the type of plan that you choose.
  • The firm wants exactly3000 units to be left in inventory at the end of the fiscal year (after forecasted December 2017 demand is satisfied). This is a firm requirement for all plans.
  • The staffing level at the beginning of 2018 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 2017 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 1 Cost Information Table:

Inventory holding cost

/ $5 per unit per month based on ending inventory for month
Average pay rate / $12 an hour
Overtime pay rate / $18 an hour
Costs of hiring one additional employee / $3000
Costs of firing one employee / $2500
Original Staffing Level (12/2016) / 16 employees
Material cost to produce one unit / This cost in dollars per unit will be the thelast two digits of your OSU student ID number. If you are working with a group, write down the last two numbers of each partner and average them. Use that average for your material cost.
Backorder Costs / $25 per unit per month held based on ending backorder level for month

Assignment 1Operating Constraints Table:

Maximum inventory level

/ 14,000 units due to limited warehouse capacity and increasing interest levels.
Maximum production capacity / 13,000 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.