Plan for Cut-and-Try:

Plan 1

Generate two exact monthly production needs using a regular eight - hour day by varying workforce size.

Plan 2

Produce to meet expected average demand over the next six months by maintaining the constant workforce. This constant number of workers is calculated by discovering the average number of workers required each day over the horizon.

Take the total production requirements and multiply by the time needed for each unit. Then divide by the overall time that one person works over the horizon

[(8,000 units × 5 hour per unit)/(125 days × 8 hour per day) = 40 workers]. Inventory is permitted to accumulate, with storage filled from next month's productions by backordering. Negative beginning inventory balances indicate that demand is backordered. In some cases sale will be lost if demand is not met. The lost sale may be shown with a negative ending inventory balance followed by a zero beginning inventory balance in the next period. Notice down that in this plan we use our safety stock in January, February, March and June to meet expected demand.

Plan 3

Generate to meet the minimum expected demand using a constant workforce on regular time. Subcontract to meet added output requirements. The number of workers is calculated by locating the minimum monthly production requirement and determining how many workers would be needed for that month [(850 units × 5 hours per unit)/(21 days × 8 hours per day) = 25 workers] and subcontracting any monthly difference among requirements and production.

Plan 4

Generate to meet expected demand for all but the first two months by using a constant workforce on regular time. Utilize overtime to meet additional output requirements. The number of workers is harder to compute for this plan, but the goal is to finish June with an ending inventory as close as possible to the June safety stock. By trial and error it may be shown that a constant workforce of 38 workers is the closest approximation.