b) CASE: AUTO ASSEMBLY Automobile Alliance, a large automobile manufacturing company, organizes the vehicle it manufacturers into three families: a family of trucks, a family of small cars, and a family mid sized and luxury cars. One plant outside Detroit, MI, assembles two models from the family of midsized and luxury cars. The first model, the “Family Thrillseeker”, is a four door sedan with vinyl seats, plastic interior, standard features, and excellent gas mileage. This is marked as a smart buy for middle class families with tight budgets and each Family Thrillsecker sold generates a modest profit of $3600 for the company. The second model, the “Classic Cruiser”, is a two door luxury sedan with leather seats, wooden interior, custom features, and navigational capabilities. It is marked as a privilege of affluence for upper-middle class families, and ich Classic Cruiser sold generates a healthy profit of $5400 for the company. Ramesh, the manager of the assembly plant, is currently deciding the production schedule for the next month. Specifically, he must decide how many Family Thrillseeker and Classic Cruiser to assemble in the plant to maximize profit for the company. He knows that the plant possesses the capacity of 48000 labor hours during the month, He also knows that it takes 6 labor-hours to assemble one Family Thrillseeker and 10.5 labor-hours to assemble one Classic Cruiser. Because the plant is simply an assembly plant, the parts required to assemble the two models are not produced at the plant. They are instead shipped from other plants around the Michigan area to the assembly plant. For example, res, steering wheels, window, seats and doors arrive from various supp! plants. For the next month, Ramesh knows that he will be able to obtain only 20000 doors (10000 left hand doors and 10000 right-hand doors) from the door supplier. A recent labor strike forced the shutdown of that particular supplier plant for several days, and that the plant will not be able to meet its production schedule for the next month. Both the Family Thrillseeker and Classic Cruiser use the same door part. In addition, in recent company forecast of the monthly demands for different automobile models suggested that the demand for the Classic Cruiser is limited to 3500 cars. There is no limit for the demand for the Family Thrillsceker within the capacity limit of the assembly plant. Formulate and solve the LPP to determine the quantity to be assembled for the two quantities. Before he makes the final production decision, Ramesh plans to explore the following questions independently except where otherwise indicated. The marketing department knows that it can pursue a targeted $500000 advertising campaign that will raise the demand for the Classic Cruiser next month by 20%. Should the campaign be undertaken?Go) a) 2) hy Ramesh knows that he can increase next month’s plant capacity by using overtime labor. He can increase the plant labor capacity by 25%. With this new assembly capacity, how many Family Thrillseeker and Classic Cruiser should be assembled? Ramesh knows that overtime labor does not come without extra cost. What is the maximum amount she will be willing to pay for overall labor beyond the cost of this labor at regular time rates? Express your answer as lump sum. Ramesh explores the option of using both the targeted advertising campaign and the overtime laborhours. The advertising campaign raises the demand for the Classic Cruiser by 20%, and the overtime labor increases the plants labor-hour capacity by 25%. How many of Family Thrillseeker and Classic Cruiser should be assembled using the advertising campaign and the overtime labor-hours if the profit from each Classic Cruiser continues to be 50% more than for each Family Thrillsecker sold? Knowing that the advertising campaign costs $500000and the maximum usage of the overall laborhour costs $1600000 beyond regular time rates, is the solution found in question (e) a wise decision compared to the solution found in question (a)? Automobile Alliance has determined that dealerships are actually heavily discounting the price of the Family Thrillseeker to move them of the lot. Because of the profit sharing agreement with the dealers, the company is therefore not making a profit of $36000n the Family Thrillseeker but instead making a profit of $2800. Determine the number of Family Thrillseeker and Classic Cruiser that should be assembled given this new discounted price. The company has discovered quality problems with the Family Thrillseeker by randomly testing them at the end of assembly line. Inspector has discovered that in over 60% of the cases, two of the four doors of a Family Thrillseeker donot seal properly. Because the percentage of defective Family Thrillsecker is very high, the floor supervisor has decided to perform quality control tests on every Family Thrillseeker at the end of the line. Because of the added tests the time it takes to assemble one Family Thrillseeker has increased from 6 to 7.5 hours. Determine the number of Family Thrillseeker and Classic Cruiser that should be assembled given this new assembly time. The BOD of Automobile Alliance wishes to capture a large market share of luxury sedan market & hence would like to meet full demand for Classic Cruiser. They ask Ramesh to determine how much profit of her assembly plant would decrease as compared to the profit found in Part (a). They then ask her to meet the full demand for Classic Cruiser if the decrease in profits is not more than $2000000. Ramesh now makes his final decision by combining all the new considerations deseribed in part (f), (g), and (h). What are his final decisions on whether to undertake to advertising campaign, whether to use overtime, and the number of Family Thrillseeker and Classic Cruiser to assemble?Workforce Scheduling At Davis Instruments Davis Instruments has two manufacturing plants located in Atlanta, Georgia. Product demand varies considerably from month to month, causing Davis extreme difficulty in workforce scheduling. Recently Davis started hiring temporary workers supplied by WorkForce Unlimited, a company that specializes in providing temporary employees for firms in the greater Atlanta area, WorkForce Unlimited has offered to provide temporary employees under three contract options that differ in terms of the length of ‘employment and the cost. The three options are summarized: Options Length of Employment Cost 1 One month $2000 2 Two months $4800 3 ‘Three months $7500 The longer contract periods are more expensive because WorkForce Unlimited has greater difficulty finding temporary workers who are willing to commit to longer work assignments. Over the six months, Davis has projected the following needs for additional employees. Month January February March April = May June Emplyees needed 10 23 19 26 20 14 Each month, Davis can hire as many temporary employees as needed under each of the three options. For instance, if Davis hires five employees in January under Options 2, Workforce Unlimited will supply Davis with five temporary workers who will work two months: January & February. For this, Davis will have to pay 5($4800) = $24000.Because of some merger negotiations underway, Davis does not want to commit to any contractual obligations for temporary employees that extend beyond June. Davis has a quality control program that requires each temporary employee to receive training at the time of hire. The training program is required even if the person has worked for Davis instruments in the past. Davis estimates that the cost of training is $875 each ime a temporary employee is hired. Thus, if a temporary employee is hired for one month, Davis will incur a training cost of $875,but will inour no additional trai ing costs if the employee is on a two -or three—month contract. Managerial Report Develop a model that can be used to determine the number of temporary employees Davis should hire each month under each contract plan inorder to meet the projected needs at minimum total cost. Include the following items in your reports 1. A schedule that shows the number of temporary employees that Davis should hire each month for each contract options.A summary table that shows the number of temporary employees that Davis should hire under each contract option, the associated contract costs for each option, and the associated training cost for each option, Provide summary total totals showing the total number temporary employees hired, total contract cost and total training costs. If the cost to train each temporary employee could be reduced to $700 per month, how would the hiring plan is affected? Explain. Discuss the implications for identifying the methods for reducing trai ing costs. How much of a reduction in training costs would be required to change the hiring plan based on a training cost of $875 temporary employees? Suppose that Davis want to hire 10 full-time employees at the beginning of January in order to satisfy part of the labour requirements over the next six months. If Davis can hire full-time employees for $ 16.50 per hour, including fringe benefits, what would be the effect on total labour and training costs over the six months period as compared to hiring only temporary employees? ‘Assume that full-time and temporary employees both work approximately 168 hours per month. Provide a recommendation regarding the decision to hire additional full time employees.