Assignment
Part I:
The Cedar Point Marina, as part of the service it offers to its customers, stores boats during the winter months. In addition, at the request of the customer, they will also paint the hull of the boat, which must be done every couple of years to prevent barnacles from attaching and to prolong the life of the boat.
Pat, the owner, currently employs one handyperson during the summer months who does a wide variety of tasks. Pat is considering three different options of labor planning over the next winter to satisfy customer requests to care for boats needing both storage and painting, with the estimated number of hours required to paint each size boat of:
Boat size Number of boats Hours to paint each boat
Small 28 8
Medium 30 12
Large 18 20
As option #1, Pat can continue to employ the same handyperson during the six winter months (Nov to April) to paint the boats. With this option the person could work up to 40 hours per week for each of the 6 months (assuming a simple 4.0 weeks per month, 40 hrs per week). Pat estimates the cost of painting the boats to be $35 per hour ($20 for labor and $15 for materials).
As option #2, Pat can let the handyperson go at the end October (include this layoff in your costs) and then hire the necessary number of workers to get all of the boats painted in April, without anyone working overtime, just before the boats go into the water. At the end of April, Pat would let all of the workers go, except the best person who would be kept on as next summer's handyperson. The cost of hiring a worker for this kind of schedule is estimated to be $250 per person and the layoff cost is $350 per person.
Pat's option #3 would be to hire fewer workers in April and have all of them work some overtime. The same hiring and layoff costs from option 2 would apply and should be included here. Pat would still keep the best worker as the handyperson during the summer. In this case, each worker could work 150% of a standard work week. The overtime premium is ‘time and a half' of normal wages for every hour worked over 40 hours per week.
1) Develop a plan for each of these options, and provide the costs for each option (5 points each).
2) Thoroughly discuss the pros and cons of all the options as you designed them. (5 points each)
3) Which one would you recommend to Pat? Why do you think it is the best option? (10 points)
You must consider and discuss qualitative issues beyond cost!
Part II:
A manager must decide which type of machine to buy, X, Y. or Z. Machine costs are as follows:
Machines are planned to operate 15hrs per day, 250 days per year.
Product forecasts for the products the firm makes 210, 215, 220 and 225, are expected to be stable for several years. Set-up and processing times are:
a)Assume that only machine purchasing costs are being considered. Assume that you will purchase all the same type of machine. How many of each machine would be needed, what are the costs to purchase the needed machine(s),how much capacity cushion would you have? Which machine type would you recommend purchasing? If you could purchase a mix of machines, would you recommend doing so, and why?
b)Now consider the additional information that the machines differ in terms of hourly operating costs when the machine is running. What are the projected operating costs of each machine for one year, given current demand?
c)Given the data for all alternatives, which should be selected, and what is the projected total cost (to buy machine(s) and operate) for one year? What is the total cost for five years? Are there any issues beyond cost that you, as an operations manager, would take into account? What is your final recommendation, and why is it best?
TOC Exercise: What is profit if you build all of Product X first and use remaining capacity for Product Y? What is the profit if you build Y then X? How would you explain