Discuss the below:
Q: One of PLE 's manufacturing plants supplies various engine components to manufacturere of motocycles on just in time basis. Planned production capacity for one component is 100 units per shift, and plant operates one shift per day.because fluctuations in customers assembly operations, however demand fluctuates and is historically between 80 and 130 units per day. to remain sufficient invintory to meet its just in time commitments , PLE management is considering a policy to run a second shift the next day if inventory falls 50 or below at the end of the day .( after the day demand is known ). For the annual budget planning process , managers need to know how many additional shifts will be needed . the fundamental equation that governs this process each day is
ending inventory = beginning inventory+production- demand
Develop a spread sheet model to stimulate 260 working days(1 year), and count the number of additional shifts that are required. Assume that the initial inventory is 100 units. Use PSI functions for all uncertain cells in building your model.Using the number of additional shifts required as the output cell for a monte carlo simulation,find the distribution of the number of shifts that the company can expect to need over the next year.explain and summarize your findings in a report to the plant manager and make a recommendation as to how many shifts to plan in next year's budget.