Problem 2 Global Gear Company (GGC) produces more than 2,500 different precision gears. Last year (250 working days) GCC made 45,000 gears of various kinds with an average of 45 workers. MonthJan-18 Feb-18 Mar-18 18 May-18 Jun-18Jul-18 Aug 18 -18 Oct-18Nov-18 Dec-18 Demand4500 3200 4100 37006400 3600 3800 5000 4700 4500 41003200 working days 23 20 21 23 21 23 20 23 21 The information regarding GGC manufacturing operations is as follows: holding costs: hiring costs: $450 per worker lay-off costs: $1000 per worker there are currently 35 workers at Precision Gear . $5 per gear per month .currently there are 1,400 units and inventory . at the end of this planning period, there should be 1,000 units in inventory backorders are not allowed Prepare three different aggregate production plans and calculate their Total Cost according to the following criteria Plan 1: Chase Strategy Zero Inventory Plan (produce exactly the amount needed per period, adapt Plan 2: Level Strategy Use a constant work-force throughout the 12-month planning period Plan 3: Linear Programming Model the problem using Linear Programming and solve it using Excel Solver Compare the three plans in a summary table and make your recommendation https://d2vlcm61l7u1fs.cloudfront.net/media%2Fc3d%2Fc3dd5d14-bfe6-47ed-a656-8b0fb0fe0cfc%2FphpAuiCB3.png

Based on last year data of 45000 units production in 250 days by 45 workers, Productivity per worker per day = 45000 / (250*45) = 4 per worker per day

Part 1: Chase Strategy

https://d2vlcm61l7u1fs.cloudfront.net/media%2F920%2F920ff89a-a9d0-4cd2-98a6-2a517458905f%2FphpYwKVrG.png
Formula:

C5 =C7*4*C4

C6 =B6-C3+C5

C7 =B7+C8-C9

C11 =C6*5

C12 =C8*450

C13 =C9*1000

Copy these formulas upto Dec month (column N)

B15 =SUM(C11:N13)

Part 2: Level Strategy

https://d2vlcm61l7u1fs.cloudfront.net/media%2F279%2F2797bf1a-5886-4795-ae7d-0f98e6b56f0c%2FphpQwsX2k.png
Level workforce = (Total demand + Ending inventory – Beginning inventory)/(working days in year*productivity per worker per day) = (50800+100-1400)/(261*4) = 47.4 ~ 48

However, 48 workers result in shortages in Sep, Oct and Nov months. So 1 more worker is added. Workers to be hired in month of Jan = 49-35 = 14

Plan 3: Linear Programming

https://d2vlcm61l7u1fs.cloudfront.net/media%2F7e3%2F7e3f76ce-24ee-4a0f-a853-29cfac1c9946%2FphpdKR62u.png
Formula:

C5 =C7*4*C4

C6 =B6-C3+C5

C7 =B7+C8-C9

C11 =C6*5

C12 =C8*450

C13 =C9*1000

Copy these formulas upto Dec month (column N)

B15 =SUM(C11:N13)

SUMMARY OF COST OF THREE PLANS

Plan 1 cost = $ 75170

Plan 2 cost = $ 96360

Plan 3 cost = $ 46040

Plan 3 results in lowest total cost. Therefore, plan 3 is recommended.

 
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