QUESTION 1

a) Develop a chase plan that matches the forecast and compute the total cost of your
plan.

Period 1 2 3 4 5 6 7 8 Total
Forecast 120 135 104 120 125 125 140 135 1040
Output
Regular 120 120 130 120 125 125 130 130 1010
Overtime 5 10 10 5 30
Subcontrac
t
Output- 0 0 0 0 0 0 0 0
Forecast
Inventory
Beginning 0 0 0 0 0 0 0 0
Ending 0 0 0 0 0 0 0 0
Average 0 0 0 0 0 0 0 0 0
Backlog
Costs
Output
Regular 7200 7800 7800 7200 7500 7500 7800 7800 $6060
0
Overtime 450 900 900 450 $2700
Subcontrac
t
Hire/Lay
Off
Inventory
Backorders
Total $720 $825 $870 $720 $750 $750 $870 $825 $6330
0 0 0 0 0 0 0 0 0
b) Compare the total cost to a level plan that use inventory to absorb fluctuations.

Month 1 2 3 4 5 6 7 8 Total
Forecast 120 135 140 120 125 125 140 135 1040

Normal Capacity = 130 engines

Normal Output = $60
Overtime = $90
Beginning Inventory = 0

Period 1 2 3 4 5 6 7 8 Total
Forecast 120 135 104 120 125 125 140 135 1040
Output
Regular 130 130 130 130 130 130 130 130 1040
Overtime 5 10 10 5 30
Subcontrac
t
Output- 10 (5) (10) 10 5 5 (10) (5) 0
Forecast
Inventory
Beginning 0 10 5 0 10 15 20 10
Ending 10 5 0 10 15 20 10 5
Average 5 7.5 2.5 5 12.5 17.5 15 7.5 72.5
Backlog
Cost
Output
Regular 7800 7800 7800 7800 7800 7800 7800 7800 $6240
0
Overtime
Subcontrac
t
Hire/Lay
Off
Inventory 10 15 5 10 25 35 30 15 $145
Backorders 450 $450
Total $781 $781 $822 $780 $782 $783 $783 $781 $6299
0 5 5 0 5 5 0 5 5
QUESTION 2
i) A master schedule for each item.
Product A

Week Inventory 1 2 3 4 5 6 7 8
Quantit 20
y

Product R

Week Inventory 1 2 3 4 5 6 7 8
Quantit 50
y

ii) An assembly time chart.

D
B
E A
C
E
D
B R
E
1 2 3 4 5 6 7 8

iii) If the component are ordered as required (no fixed lot sizes), what should be the
size of each order?
A LT = 3 weeks Beg. Inv 1 2 3 4 5 6 7 8
Gross requirement 20
Scheduled receipt
Projected on hand 7 7 7 7 7 7 7 7 7
Net requirement 13
Planned order receipt 13
Planned order release

R LT = 4 weeks Beg. Inv 1 2 3 4 5 6 7 8

Gross requirement 50
Scheduled receipt
Projected on hand 9 9 9 9 9 9 9 9 9
Net requirement 41
Planned order receipt 41
Planned order release 41

B
LT = 2

Inventory 1 2 3 4 5 6 7 8
Gross requirement 16 26
4
Scheduled receipt
Projected on hand 84 84 84 84 84 0
Net requirement 80 26
Planned order receipt 80 26
Planned order release 80 26

C
LT = 3

Inventory 1 2 3 4 5 6 7 8
Gross requirement 39
Scheduled receipt
Projected on hand 23 23 23 23 23 23
Net requirement 16
Planned order receipt 16
Planned order release 16

E
LT = 1
 Inventory 1 2 3 4 5 6 7 8
Gross requirement 240 78 52
Scheduled receipt
Projected on hand 160 16 160 0 0 0
0
Net requirement 80 78 52
Planned order receipt 80 78 52
Planned order release 80 78 52

D
LT = 1

Inventory 1 2 3 4 5 6 7 8
Gross requirement 160 52
Scheduled receipt
Projected on hand 190 19 190 30
0
Net requirement 22
Planned order receipt 22
Planned order release 22
QUESTION 3
i) The combination 2 – D is undesirable.

MACHINE A B C D E Rmin
1 14 18 20 17 18 14
2 1 15 19 16 17 14
3 12 16 15 14 17 12
4 11 13 14 12 14 11
5 10 16 15 14 13 10

step a)
A B C D E

1 0 4 6 3 4
2 0 1 5 2 3
3 0 4 3 2 5
4 0 2 3 1 3
5 0 6 5 4 3
Column 0 1 3 1 3
Min

Step b)
A B C D E

1 0 3 3 2 1
2 0 0 2 1 0
3 0 3 0 1 2
4 0 1 0 0 0
5 0 5 2 3 0

Therefore, optimum.

Step c)
A B C D E
 1 0 3 3 2 1
2 0 0 2 1 0
3 0 3 0 1 2
4 0 1 0 0 0
5 0 5 2 3 0
Step d)
1 – A = 14
2 – B = 15
3 – C = 15
4 – D = 12
5 – E = 13
= 69

ii) The combination 1 – A and 2 – D are undesirable.

MACHINE A B C D E Rmin
1 14 18 20 17 18 14
2 1 15 19 16 17 14
3 12 16 15 14 17 12
4 11 13 14 12 14 11
5 10 16 15 14 13 10

Step a)
A B C D E

1 0 4 6 3 4
2 0 1 5 2 3
3 0 4 3 2 5
4 0 2 3 1 3
5 0 6 5 4 3
Column 0 1 3 1 3
Min

Step b)
A B C D E

1 0 3 3 2 1
 2 0 0 2 1 0
3 0 3 0 1 2
4 0 1 0 0 0
5 0 5 2 3 0

Therefore, optimum.

Step c)
A B C D E

1 0 3 3 2 1
2 0 0 2 1 0
3 0 3 0 1 2
4 0 1 0 0 0
5 0 5 2 3 0

Step d)
1 – A = 14
2 – B = 15
3 – C = 15
4 – D = 12
5 – E = 13
= 69

Step e)
A B C D E

1 0 3 3 2 1
2 0 0 2 1 0
3 0 3 0 1 2
4 0 1 0 0 0
5 0 5 2 3 0

Step f)
A B C D E

1 0 2 2 1 0
2 0 0 2 1 0
3 0 3 0 1 0
4 0 1 0 0 0
5 0 5 2 3 0

1 – E = 18
2 – B = 15
3 – C = 15
4 – D = 12
5 – A = 10
= 70