SERVICE SERVICE MIX LABOR HOURS PER JOB a.) b.)
a.) b.)
Machine Labor Mix Machine Labor
A20 60% 0.20 0.15 0.12 0.09 45% 0.09 0.07
MACHINE HOURS
PER UNIT
LABOR HOURS
PER UNIT
PRODUCT
MIX
a.) b.)
Machine Labor Mix Machine Labor
Deluxe Models 45% 10.0 5.0 4.50 2.25 30% 3.00 1.50
a.) The assumptions that must be made in order to use the weighted per-unit
c.) When the product mix changes from month to month, Bangor should use
Model
PRODUCT
MIX
MACHINE
HOURS
LABOR
HOURS
October 44,000 39600 880 248 6
November 52,000 46800 1040 293 7
WORKERS
NEEDED
MACHINES
NEEDED
MONTH
SALES
FORECAST
WORKER
HOURS
MACHINE
HOURS
January 3500 700 4200 10010
February 3300 1000 4300 10050
Average Labor Per Product A 2.5
Average Labor Per Product B 1.8
MONTH
FORECAST
PRODUCT A
FORECAST
PRODUCT B
a.) COMBINED
FORECAST
b.) TOTAL LABOR
HOURS REQUIRED
227 1,000
March 1,592 31,840 199 252 2,016 025 1,424
August 1,992 39,840 249 252 2,016 0 0 4,408
September 2,504 50,080 313 252 2,016 0 0 3,920
Costs Information: Layoff Hiring Inventory
Monthly per-unit holding cost: $6
MONTH
FORECASTED
SALES
SALES IN
WORKER
HOURS
WORKERS NEEDED
TO MEET SALES
AVERAGE = 252
ENDING
INVENTORY
ACTUAL
WORKERS
ACTUAL
PRODUCTION
LAYOFFS
HIRINGS
227 1,000
March 1,592 31,840 199 199 1,592 28 01,000
August 1,992 39,840 249 249 1,992 061 1,000
September 2,504 50,080 313 313 2,504 064 1,000
October 2,504 50,080 313 313 2,504 0 0 1,000
Costs Information: Layoff Hiring Inventory
Hiring: $750,000 Totals: 250 250 12,000
Starting and ending workforce: 227
Hours worked per month per worker: 160
Hours per unit: 20
MONTH
FORECASTED
SALES
SALES IN
WORKER
HOURS
WORKERS NEEDED
TO MEET SALES
AVERAGE = 252
ENDING
INVENTORY
ACTUAL
WORKERS
ACTUAL
PRODUCTION
LAYOFFS
HIRINGS
50 500
March 2,000 8,000 50 47 1,880 3 0 380
Totals 14,550 14,160 14 14 3,140
Information: Layoff Hiring Inventory
Totals: 14 14 3,140
Costs: $2,800 $4,200 $12,560
Cost of plan: $19,560
Planning values
Starting inventory: 500
ENDING
INVENTORY
ACTUAL
WORKERS
ACTUAL
PRODUCTION
LAYOFFS
HIRINGS
MONTH
FORECASTED
SALES
SALES IN
WORKER
HOURS
WORKERS NEEDED
TO MEET SALES
AVERAGE = 252
227 1,000
March 1,592 31,840 199 252 2,016 025 1,424
August 1,992 39,840 249 252 2,016 0 0 4,408
September 2,504 50,080 313 252 2,016 0 0 3,920
October 2,504 50,080 313 252 2,016 0 0 3,432
November 3,000 60,000 375 252 2,016 0 0 2,448
Costs Information: Layoff Hiring Inventory
Hiring: $75,000 Totals: 25 25 32,224
Layoff: $50,000 Costs: $50,000 $75,000 $193,334
Inventory: $193,344 Cost of plan: $318,334
Cost of plan: $318,344
Planning values
Starting inventory: 1000
Starting and ending workforce: 227
ENDING
INVENTORY
ACTUAL
WORKERS
ACTUAL
PRODUCTION
LAYOFFS
HIRINGS
MONTH
FORECASTED
SALES
SALES IN
WORKER
HOURS
WORKERS NEEDED
TO MEET SALES
AVERAGE = 252
Part a.)
20 0
Dec-16 676 2,899 3,575 11,440 72 75 3,750 0 0 227
Feb-17 624 2,671 3,295 10,544 66 75 3,750 0 0 610
Apr-17 475 3,102 3,577 11,446 72 75 3,750 0 0 918
Jun-17 819 2,409 3,228 10,330 65 75 3,750 0 0 1,660
Costs Information:
Hiring: $16,500 Starting inventory: 0
Hiring cost per worker: $300
Layoff cost per worker: $300
Monthly per-unit holding cost: $15
Part b.)
20 0
Nov-16 650 3,048 3,698 11,834 74 74 3,700 0 54 2
Jan-17 624 3,198 3,822 12,230 76 76 3,800 0 4 5
Mar-17 696 2,919 3,615 11,568 72 72 3,600 0 6 -5
May-17 566 2,964 3,530 11,296 71 71 3,550 1 0 38
LAYOFFS
HIRINGS
ENDING
INVENTORY
SALES IN
WORKER
HOURS
WORKERS
NEEDED TO MEET
SALES AVERAGE =
ACTUAL
WORKERS
ACTUAL
PRODUCTION
AGGREGAT
E
FORECAST
ENDING
INVENTORY
ACTUAL
WORKERS
ACTUAL
PRODUCTION
LAYOFFS
HIRINGS
MONTH
AGGREGAT
E
FORECAST
SALES IN
WORKER
HOURS
WORKERS
NEEDED TO MEET
SALES AVERAGE =
DEUTSCHLANDER
FORECAST
BEEFEATER
FORECAST
MONTH
BEEFEATER
FORECAST
DEUTSCHLANDER
FORECAST
Jul-17 754 3,381 4,135 13,232 83 83 4,150 0 18 75
Costs Information:
Hiring: $29,400 Starting inventory: 0
Hiring cost per worker: $300
Layoff cost per worker: $300
Monthly per-unit holding cost: $15
Part c.)
If hiring and layoff costs increased dramatically the level plan would be less expensive than the
100
January 750 840 0190 $2,100,000 $1,687,600 $412,400 $412,400
May 820 840 0370 $2,296,000 $1,694,800 $601,200 $2,544,400
June 840 840 0370 $2,352,000 $1,694,800 $657,200 $3,201,600
Information:
Cash inflow per cabinet: $2,800
CASH
OUTFLOWS
NET
FLOW
CUMULATIVE
NET FLOW
MONTH
SALES
FORECAST
REGULAR
PRODUCTION
OVERTIME
PRODUCTION
INVENTORY /
BACKORDERS
CASH
INFLOWS
Part a.)
0
January 800 1150 0350 $400,000 $406,000 ($6,000) ($6,000)
Information:
Cash inflow per cabinet: $500
MONTH
SALES
FORECAST
REGULAR
PRODUCTION
OVERTIME
PRODUCTION
CUMULATIVE
NET FLOW
ENDING
INVENTORY
CASH
INFLOWS
CASH
OUTFLOWS
NET
FLOW
S&OP Spreadsheet
Labor hrs. per unit: 20
Worker hrs. per month: 160
Beginning & ending workforce: 100
Beginning & ending inventory: 100
Total plan cost
Production cost per unit: $550.00 $6,600,000
Month
Sales
Forecast
Sales (in
labor hrs.)
Sales (in
workers)
Actual
Workers
Actual
Production
Hirings Layoffs
Ending
Inventory /
Back Orders
100 100
March 700 14,000 87.5 87.50 700.00 12.50 0.00 100.00
April 800 16,000 100.0 100.00 800.00 12.50 0.00 100.00
May 900 18,000 112.5 112.50 900.00 12.50 0.00 100.00
Sales & Operations Planning Spreadsheet for Kumquats Unlimited
(with solver optimization)
Production cost per batch: $2,400 Production costs: $14,448,000
Month
Sales
Forecast
Sales
(in line hours)
Sales (in
production
lines)
Actual
Production
Lines
Actual
Production
Production Line
Start-ups
Production Line
Shutdowns
Ending
Inventory
55 100
January 1,000 16,000 50 55.00 1,100 0 0 200
February 1,200 19,200 60 55.00 1,100 0 0 100
March 1,200 19,200 60 55.00 1,100 0 0 0
50 10,000
December-17 37,000 9,250 58 49 31,360 0 0 1,940
January-18 22,000 5,500 34 49 31,360 0 0 11,300
May-18 38,000 9,500 59 49 31,360 0 0 36,240
Costs Information:
Hiring: $1,250 Starting inventory: 10,000
ENDING
INVENTORY
ACTUAL
WORKERS
ACTUAL
PRODUCTION
LAYOFFS
HIRINGS
Question 1.) Advantages to a level production plan are that the hiring and layoff costs are very low and the
Question 2.) Monthly S&OP updates will rolling planning horizons will help alleviate Patricia’s concerns because
MONTH
SALES
FORECAST
SALES IN
WORKER HOURS
WORKERS NEEDED
TO MEET SALES
AVERAGE = 49
Question 2.) Monthly S&OP updates will rolling planning horizons will help alleviate Patricia’s concerns because
Question 3.) I agree with David Griffin *if* the cost of retaining an employee while not producing is less or equal