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  • Each Period Is 2 Months Beginning Inv. 200 Hours Required Per Unit 20 Maintain at Least 200 Employee Hours Per Period 352 Starting Employment 30

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    This document compares three strategies - Chase, Level, and Hybrid (Mixed) - for scheduling production and employment over six periods to meet fluctuating demand while controlling inventory and labor costs. The Chase strategy aims to match production to demand each period. The Level strategy maintains a constant employment level and production rate equal to the average demand. The Hybrid strategy uses the Chase approach for the first three periods and the Level approach for the last three periods. It calculates the costs for each strategy and finds the Hybrid approach results in the lowest total costs.

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    Davis Example1

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    This document compares three strategies - Chase, Level, and Hybrid (Mixed) - for scheduling production and employment over six periods to meet fluctuating demand while controlling inventory and labor costs. The Chase strategy aims to match production to demand each period. The Level strategy maintains a constant employment level and production rate equal to the average demand. The Hybrid strategy uses the Chase approach for the first three periods and the Level approach for the last three periods. It calculates the costs for each strategy and finds the Hybrid approach results in the lowest total costs.

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    © All Rights Reserved
    Download as XLS, PDF, TXT or read online from Scribd
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    8 views4 pages

    Each Period Is 2 Months Beginning Inv. 200 Hours Required Per Unit 20 Maintain at Least 200 Employee Hours Per Period 352 Starting Employment 30

    Uploaded by

    abu naym
    This document compares three strategies - Chase, Level, and Hybrid (Mixed) - for scheduling production and employment over six periods to meet fluctuating demand while controlling inventory and labor costs. The Chase strategy aims to match production to demand each period. The Level strategy maintains a constant employment level and production rate equal to the average demand. The Hybrid strategy uses the Chase approach for the first three periods and the Level approach for the last three periods. It calculates the costs for each strategy and finds the Hybrid approach results in the lowest total costs.

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    © All Rights Reserved
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    of 4

    DemoChase

    EXAMPLE #1
    EACH PERIOD IS 2 MONTHS
    BEGINNING INV.=200 HOURS REQUIRED PER UNIT = 20
    MAINTAIN AT LEAST 200 EMPLOYEE HOURS PER PERIOD = 352
    STARTING EMPLOYMENT =30
    PLAN 1 CHASE STRATEGY
    PERIOD 1 2 3 4 5 6
    DEMAND 400 380 470 530 610 500
    EMPL. 30 23 22 27 30 35 28 (D*20/352)
    HIRE 5 3 5
    FIRE 7 1 7 round up to 24
    PRODUCTION 400 380 470 530 610 500 (=demand) round up to 32
    E. INV. 200 200 200 200 200 200 200

    COSTS REG. WAGE $15/HR. INV. COST $10 PER PERIOD


    HIRE COST $400 FIRE COST $500

    REG. TIME $121,440 $116,160 $142,560 $158,400 $184,800 $147,840 $871,200


    INV. CARRY $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $12,000
    HIRING COST $0 $0 $2,000 $1,200 $2,000 $0 $5,200
    FIRING COST $3,500 $500 $0 $0 $0 $3,500 $7,500
    TOTAL COST $126,940 $118,660 $146,560 $161,600 $188,800 $153,340 $895,900

    RULE: schedule production=forecast demand


    schedule necessary employment level

    Page 1
    DemoLevel

    EXAMPLE #1
    EACH PERIOD IS 2 MONTHS
    BEGINNING INV.=200 HOURS REQUIRED PER UNIT = 20
    MAINTAIN AT LEAST 200 EMPLOYEE HOURS PER PERIOD = 352
    STARTING EMPLOYMENT =30
    PLAN 2 LEVEL STRATEGY
    PERIOD 1 2 3 4 5 6
    DEMAND 400 380 470 530 610 500 DEM. AV.= 482
    EMPL. 30 28 28 28 28 28 28 482*20/352= 27.4
    FIRE 2
    PRODUCTION 493 493 493 493 493 493 28*352/20 493 round up to 24
    E. INV. 200 293 406 428 391 274 267 round up to 32

    COSTS REG. WAGE $15/HR. INV. COST $10 PER PERIOD


    HIRE COST $400 FIRE COST $500

    REG. TIME $147,840 $147,840 $147,840 $147,840 $147,840 $147,840 $887,040


    INV. CARRY $2,928 $4,056 $4,284 $3,912 $2,740 $2,668 $20,588
    HIRING COST $0
    FIRING COST $1,000 $0 $0 $0 $0 $0 $1,000
    TOTAL COST $151,768 $151,896 $152,124 $151,752 $150,580 $150,508 $908,628

    RULE: Schedule production at average demand


    keep a cosntant employment level for the cosnstant production rate
    Inventory then builds up during low periods and goes down during high periods

    Page 2
    DemoMixed

    EXAMPLE #1
    EACH PERIOD IS 2 MONTHS
    BEGINNING INV.=200 HOURS REQUIRED PER UNIT = 20
    MAINTAIN AT LEAST 200 EMPLOYEE HOURS PER PERIOD = 352
    STARTING EMPLOYMENT =30
    PLAN 3 HYBRID OR MIXED STRATEGY

    PERIOD 1 2 3 4 5 6
    DEMAND 400 380 470 530 610 500 Av.D 1-3 417
    EMPL. 30 24 24 24 32 32 32 Av. D 4-6 547
    HIRE 8 417*20/352= 23.67 round up to 24
    FIRE 6 547*20/352= 31.06 round up to 32
    PRODUCTION 422 422 422 563 563 563
    E. INV. 200 222 265 217 250 204 267

    COSTS REG. WAGE $15/HR. INV. COST $10 PER PERIOD


    HIRE COST $400 FIRE COST $500 TOTAL
    REG. TIME $126,720 $126,720 $126,720 $168,960 $168,960 $168,960 $887,040
    INV. CARRY $2,224 $2,648 $2,172 $2,504 $2,036 $2,668 $14,252
    HIRING COST $0 $0 $0 $3,200 $0 $0 $3,200
    FIRING COST $3,000 $0 $0 $0 $0 $0 $3,000
    TOTAL COST $131,944 $129,368 $128,892 $174,664 $170,996 $171,628 $907,492

    RULE Designate periods 1-3 as "low" and 4-6 as "high"


    Schedule a low level in periods 1-3 and a higher level for periods 4-6
    Schedule employment as required

    assumption: production is what the scheduled employees could produce


    e.g., period 1: 24*352/20 = 422.4 rather than the average of 417

    SUMMARY CHASE $895,900

    Page 3
    DemoMixed

    LEVEL $908,628
    HYBRID $907,492

    Page 4

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