Problem:
Jerry is production manager for the ProtoPlastics Company. They make two major items – widgets and gizmos. Demand history, by month, for the last two years is given. You have recently been hired at Proto, and Jerry has asked you to plan production for the next year. It takes a worker two days to make a widget and three days to make a gizmo. Currently, there are 32 workers at the plant. To hire a new worker costs $700, and to lay off an existing worker costs $1000. Workers are paid $2000 per month. A widget costs $250 to make, and a gizmo costs $380. The inventory-cost carrying rate for Proto is 36% per year. Backorders are not allowed. Develop a monthly aggregate production plan and work-force levels for months 25 through 30.
Year 1 Year 2
Month Widget Gizmos Month Widget Gizmos
1 101 200 13 102 222
2 97 197 14 102 220
3 94 196 15 97 225
4 102 200 16 110 222
5 101 202 17 92 227
6 92 209 18 102 228
7 97 207 19 110 232
8 91 216 20 92 234
9 103 212 21 102 242
10 92 220 22 107 236
11 97 216 23 103 241
12 91 218 24 91 239
Hint: Use Double Exponential Smoothing for the forecasting part with α=β=0.1