Assignment 1
Production System Design

Q1) Planners for a company that makes several models of skateboards are about to prepare the aggregate plan that will cover six periods. They have assembled the following information:

They now want to evaluate a plan that calls for a steady rate of regular-time output, mainly using inventory to absorb the uneven demand but allowing some backlog. Overtime and subcontracting are not used because they want steady output. They intend to start with zero inventory on hand in the first period. Prepare an aggregate plan and determine its cost using the preceding information. Assume a level output rate of 300 units (skateboards) per period with regular time (i.e., 1,800÷6 = 300). Note that the planned ending inventory is zero. There are 15 workers, and each can produce 20 skateboards per period.
Q2) Manager T. C. Downs of Plum Engines, a producer of lawn mowers and leaf blowers, must develop an aggregate plan given the forecast for engine demand shown in the table. The department has a normal capacity of 130 engines per month. Normal output has a cost of $60 per engine. The beginning inventory is zero engines. Overtime has a cost of $90 per engine.
a. Develop a chase plan that matches the forecast and compute the total cost of your plan.
b. Compare the costs to a level plan that uses inventory to absorb fluctuations. Inventory carrying cost is $2 per engine per month. Backlog cost is $90 per engine per month. Month | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | Total | Forecast | 120 | 135 | 140 | 120 | 125 | 125 | 140 | 135 | 1040 |
Q3) Given the following information set up the problem in a transportation table and solve for the minimum-cost plan:

Q4) Forecasts based on averages. Given the following data: Period | Number of Complaints | 1 | 60 | 2 | 65 | 3 | 55 | 4 | 58 | 5 | 64 |

Prepare a forecast for period 6 using each of these approaches: 1. The appropriate naive approach. 2. A three-period moving average. 3. A weighted average using weights of .50 (most recent), .30, and .20. 4. Exponential smoothing with a smoothing constant of .40.