Please solve the case below and make your recommendation. Would you use level or chase plan, or a mixed method. Would you use outsourcing and contractors, or own personnel only?
Zero Inventory Plan ` Precision Transfer, Inc. Produces more than 300 different precision gears ( the aggregation unit is a gear!). ` Last year (=260 working days) Precision made 41.383 gears of various kinds with an average of 40 workers. ` 41.383 gears per year ` 40 x 260 worker-days/year = 3,98 -> 4 gears/ worker-day ` Aggregate demand forecast for precision gear:
January February March April May June Total Demand
2760 3320 3970 3540 3180 2900 19.670
Additional data:
holding costs: $5 per gear per month
backlog costs: $15 per gear per month
hiring costs: $450 per worker
lay-off costs: $600 per worker
wages: $15 per hour ( all workers are paid for 8 hours per day)
there are currently 35 workers at Precision
currently no inventory
Calculate the example in an excel sheet.
What is your recommendation?
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