Marathur Butar Butar 0906557171 Production Planning and Inventory Control Chapter 2 (even numbers + no.

17)

1. A company wants to produce 500 units over the next 3 months at a level rate. The months have 19, 20, and 21 working days respectively. On the average, how much should the company produce each day to level production? Answers: number of product to produce = 500 units. Total working days = 19 + 20 + 21 = 60 days Production/day = 500 units/60 days = 8.33 units/day 2. In problem no.1, how much will be produced in each of the 3 months? Answers: number of production each months Month 1 = working days x production/day = 19 days x 8.33 units/day = 158 Month 2 = 20 x 8.33 = 166 units Month 3 = 21 x 8.33 = 174 units 3. A production line is to run at 1000 units per month. Sales are forecast as shown in the following. Calculate the expected period-end inventory! The opening inventory is 500 units. All periods have the same number of working days. Answers: Period Forecast Planned Production Planned 500 Inventory 1 700 1000 2 700 1000 3 1100 1000 4 1600 1000 5 1100 1000 6 800 1000

800

1100

1000

400

300

500

4. A company wants to develop a level production plan for a family of products. The opening inventory is 500 units, and a decrease to 300 units is expected by the end of the plan. The demand for each of the periods is given in what follows. All periods have the same number of working days. How much should the company produce each period? What will be the ending inventories in each period? Do you see any problems with the plan?

Answers: Period 1 2 3 4 Forecast Demand 1300 1200 800 600 Planned Production 917 917 917 917 Planned 500 117 -166 -49 268 Inventory Ending inventory = 300 units(in the end of 6th months 5 800 6 1000 Total 5700

917 385

917 300

5500

Number of level production (916,66) and number of ending inventory in each period are shown in the table. Problems happen in month 2 and 3, the number of production and inventory is less than number of forecast demand. This will lead into a backlog. One of solution could be practiced to solve the problem is to increase number of opening inventory to 666,66 units 5. If the cost of carrying inventory is $50 per unit per period and stockouts cost $500 per unit, what will be the cost of the plan developed in 2.9a? What will be the cost of the plan developed in 2.9c? Answers: (after doing problems 2.9) Total cost for situation 2.9a is $50x3 (inventory) + $500x1 (stockouts) = $650 Total cost for situation 2.9c is $50x12 + $500x0 = $600 6. A company wants to develop a level production plan for a family of products. The opening inventory is 600 units and a decrease to 200 units is expected by the end of the plan. The demand for each of the months is given in what follows. How much should the company produce each month? What will be the ending inventory in each month? Do you see any problems with the plan? Answers: Month Jan Feb Working Days 20 22 Forecast Demand 1200 1300 Planned Production 874 961 Planned 600 274 -65 Inventory Number of production each month and shown on the table. Mar 20 800 Apr 20 700 May 18 700 Jun 19 900 Total 119 5600

874 9

874 183

786 269

830 200

5200

number of ending inventory each month are

Problem happens in month February, the number of production and inventory is less than number of forecast demand in that month. This will lead into a backlog. One of solution could be practiced to solve the problem is to increase number of opening inventory to 665 so the number of ending inventory in month February becomes 0 (there is no backlog thoroughly).

7. If the opening backlog is 500 units, forecast demand is 700 units, and production is 800 units, what will be the ending backlog? Answers: ending backlog = opening backlog + forecast demand production = 500 + 700 800 = 400 units 8. The opening backlog is 1100 units. Forecast demand is shown in the following. Calculate the weekly production for level production if the backlog is to be increased to 1200 units! Answers: Week 1 2 3 4 5 6 Total Forecast Demand 1200 1100 1200 1200 1100 1000 6800 Planned Production 1117 1117 1117 1117 1117 1117 6700 Projected 1100 1183 1166 1249 1332 1315 1200 Backlog So, planned production = forecast demand + opening backlog ending backlog = 6800 + 1100 -1200 = 6700 Planned production per month = 6700 / 6 = 1116,66 units/month = 1117 units/month 9. For the following data, calculate the number of workers required for level production and the resulting month-end inventories! Each worker can produce 14 units per day, and the desired ending inventory is 9000 units. Answers: Month Working Days Forecast Demand Planned Production Planned 11.500 Inventory 1 20 28.000 2 24 27.500 3 12 28.500 4 19 28.500 Total 75 112.500

29.400 12.900

36.750 22.150

17.640 11.290

27.930
9.000

Total planned production = forecast demand + ending inventory - opening inventory = 112.500 + 9.000 11.500 = 110.000 Number of workers = planned production / (production rate x working days) = 110.000 units / (14 units/day x 75 day) = 104,76 = 105 workers First months ending inventory = opening inventory + planned production month 1 Forecast demand = 11.500+29.400-28.000 = 12.900

10. For the following data, calculate the number of workers required for level production and the resulting month-end inventories! Each worker can produce 9 units per day and the desired ending inventory is 800 units. Why is it not possible to reach the exact ending inventory target? Answers: Month Working Days Forecast Demand Planned Production Planned 1000 Inventory 1 20 2800 2 24 3000 3 12 2700 4 22 3300 5 20 2900 6 19 3200 Total 117 17.900 17.700

3060 1260

3672 1932

1836 1068

3366 1134

3060 1294

2907
800

Total planned production = forecast demand + ending inventory - opening inventory = 17.900 + 800 1000 = 17.700 Number of workers = planned production / (production rate x working days) = 17.700 units / (9 units/day x 117 day) = 16,809= 17 workers First months ending inventory = opening inventory + planned production month 1 Forecast demand = 1.000+3.060-2.800 = 1.260