Overview Congratulations! The work you did in helping Olde World Windows and Doo

Overview
Congratulations! The work you did in helping Olde World Windows and Doors evaluate their capacity and throughput challenges was very well received. Management has a much clearer picture of the nature of the constraints they are experiencing and what options they should consider in addressing them. You are now ready to move on and tackle demand and resource planning decisions. The following problems require you to draw on what you have been reading in Krajewski and Malhotra’s Operations Management: Processes and Supply Chains, specifically:
Chapter 8: Forecasting (pp. 293-319)
Chapter 9: Inventory Management (pp. 337-364)
Supplement C: Special Inventory Models (pp.381-389)
Chapter 10: Operations Planning and Scheduling (pp. 395-415)
Chapter 11: Resource Planning (pp. 459-485)
Note: You are encouraged to review these chapters before you begin to work on the problems.
DECISION PROBLEM 1: Using Forecasts to Plan for Customer Demand
Managers use forecasts to plan ahead to ensure the company has sufficient products and resources to meet customer demand for the coming month, quarter, or year. Accurate forecasts enable managers to make better purchasing decisions, as well as to develop more efficient resource, staffing, and scheduling plans.
Olde World’s sales manager must make purchasing plans for the private-label products Olde World sells. One of the items the company stocks is SunPro, an add-on that customers buy to spray on their windows and doors for UV protection. The sales of this item are seasonal, with peaks in the spring, summer, and fall months. Demand (in cases) for the past 12 months at Olde World are listed in the following table:
DP1-Table.png
Based on the numbers in the table above, forecast the sales (by month) from March through December using a 2-month weighted moving average. Use the weights of (3/4) and (1/4), giving more weight to more recent data.
Forecast the sales for the months of March through December using exponential smoothing with α = 0.7 beginning with an initial forecast in January of $3,000 and starting error measurement in March.
Using the mean absolute deviation as your performance criterion (with error measurement beginning in March), compare the two forecasting methods you used in A and B. Which method would you recommend as a more reliable predictor? Why?
Using the mean absolute percent error as your performance criterion (with error measurement beginning in March), compare the two forecasting methods you used in A and B. Which method would you recommend as a more reliable predictor? Why?
DECISION PROBLEM 2: Inventory Management
Inventory is a stock of materials used to satisfy customer demand or to support the production of services or goods. A fundamental challenge in supply chain management is determining how much inventory to have. The decision involves a trade-off between the advantages and disadvantages of holding inventory. Managers must decide how much inventory to have, how much to order, and when to order so the company can minimize total cost while maximizing profit.
Olde World’s accessories department operates 48 weeks per year. The warehouse manager is attempting to optimize an inventory policy for one of its accessories (an automated sunscreen that rolls down when temperatures exceed 85 degrees) that it purchases from a 3rd-party supplier. Use the following information to answer the questions below.
Demand (D) = 1500 units/year
Demand is normally distributed
Standard deviation of weekly demand = 2 units
Ordering cost = $50/order
Annual holding cost (H) = $6/unit
Desired cycle-service level = 95% percent
Lead time (L) = 3 weeks
If Olde World uses a periodic review system, what should the P and T be? Round P to the nearest week. B. If Olde World uses a continuous review system, what should R be? C. Which inventory review system would you recommend? Why?
DECISION PROBLEM 3: Operations Planning and Scheduling
Managers must develop sales and operations plans (S&OP) that calculate future aggregate resource levels so that supply is in balance with demand. S&OP states a company’s or a department’s production rates, workforce levels, and inventory holdings are consistent with demand forecasts and capacity constraints.
In the window frame assembly department at Olde World, the manager estimates the following workforce requirements for its services over the next two years:
Quarter 1 2 3 4 5 6 7 8
Demand (in hours) 4,000 5,000 3,500 4,100 4,300 5,800 3,400 4,400
Currently, 8 certified machinists are employed to work in this department. Each employee works 400 hours every quarter but is also allowed to work up to an additional 100 hours of overtime. The company has a cost of $12,000 per employee per quarter for regular time worked up to 400 hours. This is based on $30/hour, which must be paid whether the machinists are active or idle. Overtime work is paid at a rate of $45 per hour on an as-needed basis. The company incurs costs of $15,000 to hire and train each new machinist and incurs costs of $6,000 for each machinist it lays off.
Based on the information above:
Use a level strategy to create a staffing plan for this department that results in no service delays. Your plan can use only overtime to meet the goals and must minimize the inactive undertime. What is the total cost of your plan based on these parameters?
Create a plan that uses a chase strategy to vary the workforce level, but that does not result in any overtime while minimizing undertime. What is the total cost of your plan based on these parameters?
Propose a staffing plan that would be superior to both a level strategy and a chase strategy. What benefits would the plan provide for Olde World? Consider the total cost of the plan as well as non-financial factors that make the plan a better choice to optimize performance.
DECISION PROBLEM 4: Resource Planning
Reminder: Organizations must be able to plan for resources (both material and human) to support the sales and operations plan. This typically requires the development of a master production schedule that connects all elements in the value chain.
One of the problems Olde World has is with master production scheduling and materials requirements planning. You have the expertise to teach them how to complete an MPS record and an MRP plan.
Complete the MPS record for Olde World’s Abbot door, based on the information below
DP4-A_Graph.png
The Abbot door has recorded inventory data and a bill of materials, as shown below. Assume the MPS start quantities for the door are 100 units in weeks 1,2,3,4,7,8,9, and 10. Create an MRP plan for the components going into the Abbot door using the data below.
DP4-B_Graph.png
What specific managerial actions are required by Olde World Windows and Doors in Week 1? Make sure you address any specific difficulties you encounter in the inventory records.
Application Activity Workbooks
To support your understanding of the principles being assessed in each decision problem, and to reduce the need for excessive number crunching, we have included an Application Activity 2 Workbook in the Week 5 Overview page in Canvas. The workbook features “solvers” that have embedded formulas to complete the calculations and to test various outcomes by adjusting the inputs.
Instructions
Download the Application Activity 2 Workbook from the Week 5 Overview page in Canvas.
Go to the tab that matches the decision problem.
Enter the relevant data into the solver, adjusting inputs (where needed) to test different scenarios.
Take notes as you go on how changes in inputs impact performance.
Identify an optimal solution that addresses the challenges posed in the decision problem.
Save your work and submit the Application Activity 2 Workbook along with your written responses.
Note: The purpose of the workbook is to help you understand the impact of changes in actions on outputs. It is not a substitute for your written responses to the decision problems in the assignment. These responses must be submitted in Word. You should treat this as the document you would submit to senior management at Olde World Windows and Doors. As such, make sure your analyses, summaries, and recommendations are well-written and are clearly supported by the data.
Submission Requirements
Your written responses must be submitted in Word.
Total length should be 2-3 pages. You are NOT required to submit elaborate explanations defending your responses; two to three sentences for each question will suffice.
Submissions must be typed, single-spaced, professional font (size 10 – 12) with one-inch margins on all sides.
Include a cover page containing the title of the assignment, your name, your professor’s name, and the course title and date.
Submit your completed Application Activity 2 Workbook along with your written responses in Word.