Inventory Plan

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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