Problem Set 2
1. eGo is an electric scooter manufacturer in Texas. The plant currently employs 80 workers who operate for 22 days a month, eight hours each day. Workers are paid $12 per hour for normal working hours and $18 per hour for overtime. Overtime is limited to a maximum of 25 hours per month per employee. One worker can assemble a scooter every 12 minutes. Component costs for each scooter is $40. Carrying inventory from one month to the next incurs a cost of $5 per scooter per month. Assume the starting inventory of 24,500 units and eGo wants to end the year with the same level of inventory. eGo is making production plans for the coming year. Below table shows the forecasted monthly demand.
Month
Demand
Month
Demand
January
58,000
July
76,000
February
81,000
August
67,000
March
70,000
September
75,000
April
93,000
October
54,000
May
61,000
November
58,000
June
82,000
December
66,000
(a) Assuming no backlogs, no subcontracting, no layoffs, and no new hires, solve the aggregate planning to find the optimal production schedule. (Hint: First, formulate the problem and then use Excel Solver to find the optimal results.)
(b) Assume A third party is offering to produce scooters at a cost of $44 per unit (including the component costs). Solve the aggregate planning problem to determine how eGo should use the third party. (Hint: Reformulate the problem by adding the third party option into the model and again use Excel Solver to find the optimal results.).
2. Discuss how eGo can respond to predictable demand variability by managing supply and demand. (Hint: Relate to the sales and operations planning strategies in Chapter 9 of the textbook.)