Homework: Industrial Engineering and Engineering Management Department- Supply Chain Management
Black Eagles is one of the biggest manufacturers of toys. Managers at Black Eagles are working on planning their demand and supply for the next year accordingly. Monthly demand forecast in the next 12 months is given as follows:
|
Month
|
Demand
|
|
1
|
10,000
|
|
2
|
11,000
|
|
3
|
15,000
|
|
4
|
18,000
|
|
5
|
25,000
|
|
6
|
26,000
|
|
7
|
30,000
|
|
8
|
29,000
|
|
9
|
21,000
|
|
10
|
18,000
|
|
11
|
14,000
|
|
12
|
11,000
|
Capacity at Black Eagles is managed by the number of machine operators they hire. The company works eight hours a day for 20 days in a month with a regular operating shift. Any time beyond that is considered overtime. Regular time pay is $15 per employee and overtime is $22 per hour. Each employee can work overtime up to 20 hours per month. Black Eagles currently has 250 employees. Two labor hours are needed to produce a toy. The inventory cost is $3 for a month. Materials cost is $40 for a toy. The retail price of a toy is $125. It is assumed that no stockouts are allowed and the starting inventory in January is 5,000 units and the desired ending inventory in December is also 5,000 units.
Note: The cost of hiring a new labor is $1,000; while the cost of laying off a labor is $2,000. No stockout and no subcontracting is allowed.
According to the market study, a promotion dropping prices by 1% in a given month will increase sales in that month by 20%, and bring forward 10% demand from each of the following two months.
1) What is the optimal production plan for the year if we assume no promotions? What is the annual profit from this plan? What is the cost of this plan?
2) Is it better to promote in April or July? How much increase in profit can be achieved as a result?
3) If toys are sold for $250 instead of $125, does the decision about the timing of the promotion change? Why?
Format your homework according to the following formatting requirements:
(1) The answer should be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides.
(2) The response also includes a cover page containing the title of the homework, the student's name, the course title, and the date. The cover page is not included in the required page length.
(3) Also include a reference page. The Citations and references should follow APA format. The reference page is not included in the required page length.