Master production

She has been asked to submit an production plan for the next calendar year. Each year Marls trade and sales discussion section produces a forecast of appliances by month for the next year, which the production cooking department uses to plan production. The first step in the planning process is to construct an blend production plan, which consists of the planned gross production by month for the year but does not indicate numbers of particular proposition appliance types, sizes or models to be made each month but is an aggregate as each type of appliance requires roughly similar materials and advertize resources.As the production periods approach later in the year, master production plans leave alone be remunerated which would be specific regarding appliance type, model number etc. Linda therefore needs to make a decision on what would be the most suitable plan to keep costs at a minimum but also taking into consideration the feasibility of the plan. Primarily, the plan shoul d involve keeping the total cost (equal to the sum of hiring costs, layoff costs, account costs and both unceasing and overtime labor costs) as low as doable.It should also take into account separate factors such as the fact that firing staff and hiring and procreation new employees brings its own headaches, especially in a emitted labor market such as exists in Stratford, as well as affecting spousal relationship relations and employee morale. In addition, excessive overtime might lead to lower efficiency and restricted production could lead to poor work habits and low morale.The implant has the physical capacity to produces only 13,000 appliances per month and currently employs 160 role players who work 40 hours a week and are expected to have an annual issue of about 480 appliances next year. The monthly cost of employment to MR., including fringe benefits, is around $2,400 per month per histrion and a worker-month of overtime costs them about $3,300. Additionally, the personnel department estimates that hiring, training and related expenses would amount to $1 ,800 per worker, whereas severance and other layoff expenses would cost a total of $1,200 per worker.MR. also expect to have 240 finished units in inventory on to hold an appliance in inventory for a month during the next year. 2. 1 . Assumptions As we will be using a unidimensional mathematical model that is a idealization of real life to obtain recommendations, we will explicitly state the simplifying assumptions and approximations made to allow us to use the model. A. We absorb that the parameter values are know with certainty.We assume that the following data are correct for every possible situation The annual output per worker will be 480 appliances per year and no appliances need to be discarded The shipment forecast for every month is precise and reliable and the company will therefore not lose potential clients due to unexpected demand changes The master production plan is form ulated correctly and has no additional implications for the aggregate plan There is no storage limit for the inventory There will be 240 units in inventory in the beginning of the next calendar yearThe cost for storage will be $8 a month for each appliance The wage cost will be $2,400 for each worker The total hiring costs to employ a new working will be $1,800 for each new worker The total layoff costs will be $1,200 for each laid off worker A worker-month of overtime costs the company $3,300 There will be 160 workers employed at the scraping of the calendar year Workers will work 40 hours a week There will be no additional costs to take into account, such as fines, legal fees or time lost due to external or internal factors such as strikes. Potential new workers re addressable to the extent needed The required raw materials are readily available from regional resources on short notice No workers quit or throw away work for extended lengths of time b. We assume that t he returns to scale are constant We also assume that the returns to scale are constant within the range of possible values for the decision variables. The output of each worker is always 40 units per month, irrespective of hiring and layoffs A worker-month of overtime also yields 40 units every time, irrespective of other factors We assume that, although a different product mix will me made at different times of he year, there is no cost providence or extra cost involved due to product mix variations. In addition, we assume that overtime, hiring and firings do not affect performance or work out catheter in any way. 3. 1 .Solution Approach We obtained three possible solutions, discussed further on, which are based on different approaches but not combining them. so we should calculate the optimal solution, using certain constraints which we decide ourselves, in Excel using the solver and the Simplex ALP method. 4. 1. Results Three possible solutions were already suggested by Linda Metzger. In the first one (Exhibit 1), production level and workforce are held constant throughout the year at a level sufficient to meet the blush demand period.