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Chapter 4: Q6PE. (page 554)
Question: Term used to describe demand that is uncertain and needs to be forecast.
Answer
Independent demand is used to describe demand that is uncertain and needs to be forecasted.
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Distinguish between pure and mixed strategies in production planning.
In the past, Taylor Industries has used a fixed鈥搕ime period inventory system that involved taking a complete inventory count of all items each month. However, increasing labor costs are forcing Taylor Industries to examine alternative ways to reduce the amount of labor involved in inventory stockrooms, yet without increasing other costs, such as shortage costs. Here is a random sample of 20 of Taylor鈥檚 items.
a. What would you recommend Taylor do to cut back its labor cost? (Illustrate using an ABC plan.)
b. Item 15 is critical to continued operations. How would you recommend it be classified?
Distinguish between in-process inventory, safety stock inventory, and seasonal inventory.
Not all the items in your office supply store are evenly distributed as far as demand is concerned, so you decide to forecast demand to help plan your stock. Past data for legal-sized yellow tablets for August are
Week 1 | 300 |
Week 2 | 400 |
Week 3 | 600 |
Week 4 | 700 |
Helter Industries, a company that produces a line of women鈥檚 bathing suits, hires temporaries to help produce its summer product demand. For the current four-month rolling schedule, there are three temps on staff and 12 full-time employees. The temps can be hired when needed and can be used as needed, whereas the full-time employees must be paid whether they are needed or not. Each full-time employee can produce 205 suits, while each part-time employee can produce 165 suits per month. Demand for bathing suits for the next four months is as follows:
May June July August
3,200 2,800 3,100 3,000
Beginning inventory in May is 403 complete (a complete two-piece includes both top and bottom) bathing suits. Bathing suits cost $40 to produce and carrying cost is 24 percent per year.
Develop an aggregate plan that uses the 12 full-time employees each month and a minimum number of temporary employees. Assume that all employees will produce at their full potential each month. Calculate the inventory carrying cost associated with your plan using planned end of month levels.
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