Operations Management

[pic 1]

QSO 600

Module 7: Homework 

By

Prasad Madhukar Mathekar

Student ID – 1104094

Submitted to – Jake Clever

Southern New Hampshire University, NH

Module 7

Problem 14.4

A. Total number of pallets divided by total number of months in a year gives us total number of pallets required every month. 36000/12 = 3000 pallets per month for a level production. Each employee can produce 200 pallets every month and with 10 people only 2000 can be produced. 5 people must be hired to achieve 3000 mark. Cost for hiring is 5 * $5000 = $25000. Cost of pallets production is $30 * 36,000 = $1,080,000.  

[pic 2]

Inventory cost is 63500 * $2 = $127,000.

Total cost is $25,000 + $127,000 + $1,080,000 = $1,232,000

B. Hire and Fire strategy should be adopted to offset workforce with demand. Hiring cost is $5,000 per employee and firing cost is $8,000.

[pic 3]

The above table explains the hiring and firing scenario based on demand. Cost of hiring is 40 * $5,000 = $200,000 and cost of firing is 35 * $8,000 = $280,000.

Total cost = $200,000 + $280,000 + $1,080,000 = $1,560,000

C.

Full time employees work their regular schedule and then Overtime and the sub-contractors will be taking care of the extra demand. The FTE and OT can work out 4000 pallets together and the subcontractors come into picture for higher demands than 4000 pallets.

[pic 4]

19,500 pallets at the regular rate is $30 * 19,500 = $585,000. Whereas 8,500 pallets under overtime is $40 * $8,500 = $340,000. In the last 8,000 pallets under sub-contractors is $50 * $8000 = $400,000

Total cost added up totals up to $1,325,000.

Option A is cheap and best

---------------------------------------------------------------------------------------------------------------------

Problem 14-10

[pic 5]

The Input and Output requirements of the linear programming

[pic 6] [pic 7]

---------------------------------------------------------------------------------------------------------------------