operation management

| December 9, 2015

The BackPack Company produces a line of backpacks. The manager, Jill Nicholas, has decided that the BackPack Company must have very good customer service.

She has asked you to develop a level aggregate plan using inventories but not back orders. All demand must be met each period. Use the following data to solve the problem:

Problem Data

Cost data

Regular-time labor cost per hour $10.00

Overtime labor cost per hour $15.00

Subcontracting cost per unit (labor only) $84.00

Holding cost per unit per period $10.00

Back-order cost per unit per period $20.00

Hiring cost per employee $600.00

Firing cost per employee $450.00

Capacity data

Beginning workforce 210 employees

Beginning inventory 400 units

Labor standard per unit 6 hours

Regular time available per period 160 hours

Overtime available per period 32 hours

Subcontracting maximum per period 1000 units

Subcontracting minimum per period 500 units

Demand data

Period 1 6000 units

Period 2 4800 units

Period 3 7840 units

Period 4 5200 units

Period 5 6560 units

Period 6 3600 units

You must:

A.) Calculate the aggregate production rate: ________ units

B.) Calculate the appropriate workforce given the aggregate production rate

C.) Show what would happen if this plan were implemented

D.) Calculate the costs of this plan

E.) Evaluate the plan in terms of cost, customer service, operations, and human resources.

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