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BCOR 3750 - Project 1B: NutCo Planning (30 Points) After the successfully forecasting the 2022 demand, NutCo hires your company to help with the production planning. Eric Barton, Director of Planning & Logistics explains: Eric: "Thank you for coming. It's amazing that a product that sells for $5.00 per unit could pay for all of this!" You: "It is pretty impressive." Eric: "NutCo is a family owned-business and, historically, the company always maintained a steady production schedule month after month. This worked fine before the growth; however, now things are bit unpredictable. Currently, we have 20 dedicated employees and each employee can produce 100K units of nut products per month at an average cost of $2.50 per unit." You: Looking at the sales plan, there is considerable amount of seasonality in your demand. This means some months could result in having too much inventory and others with potential stockouts. Do you adjust your production plan given the fluctuations? Eric: Technically...no. You need to understand that many of the employees have worked for the company for 10-20 yearsa few started when the company was first formed 25 years ago. As such, we try to ensure employees always work 8 hours a day and 5 days per week (totaling 40 hours per employee). In the past, we avoided overtime like the plague but with the sales plan you proposed, it might be necessary. The problem is that we can only add 20% more volume with overtime but the cost of the product will increase by 50%." You: "Are there any alternatives to overtime?" Eric: Yes. We have a company willing to produce our blends at a price of $4.00 per unit. The owners are hesitant of pursuing this plan for a variety of reasons but they don't want to discuss it." You: What are the consequences of having too much inventory or having stockouts? Eric: NutCo outgrew its warehouses long ago so we use an outside warehouse for excess inventory. When we send product to the warehouse at the end of the month, we charged for EVERYTHING...offloading the trailer, material handling, storage per pallet, loading customer trucks, paperwork, etc. We estimate it costs us approximately $1.75 per unit to store the product at the end of the month." You: "What's the alternative? Eric: "The alternative is to allow the inventory to have a stock-out but the issue with doing so will upset the customers some of them dropped us a year ago when the problems began while others were upset but we are shaky ground right now as a supplier. According to the sales department, the cost of a stock-out is about $1.50 per unit." You: "What are the objectives for this contract? Eric: Use the following monthly forecast to create the plan (remember the demand is in 000 units): Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2,570 2,090 3,540 2,140 1,710 2,290 1,660 4,370 3,940 4,030 4,200 3,340 Eric: Based on the inventory report, we should start Jan 2022 with 300K units. (NEXT PAGE) Scenario C: (3 Points) Properly enter the assumptions (blue cells) in the Scenario C. . (2 Points) Calculate an optimal production schedule where you can hire and layoff employees as needed (with no less than 5 employees and no more than 20 employees). You can also use up to 20% more units per month (due to overtime) and you can subcontract as many units as you need. (1 Points) Calculate the maximum profit under this scenario. (1 Point) Chart the results showing a stacked bar chart for the supply and a line chart for the demand. BCOR 3750 - Project 1B: NutCo Planning (30 Points) After the successfully forecasting the 2022 demand, NutCo hires your company to help with the production planning. Eric Barton, Director of Planning & Logistics explains: Eric: "Thank you for coming. It's amazing that a product that sells for $5.00 per unit could pay for all of this!" You: "It is pretty impressive." Eric: "NutCo is a family owned-business and, historically, the company always maintained a steady production schedule month after month. This worked fine before the growth; however, now things are bit unpredictable. Currently, we have 20 dedicated employees and each employee can produce 100K units of nut products per month at an average cost of $2.50 per unit." You: Looking at the sales plan, there is considerable amount of seasonality in your demand. This means some months could result in having too much inventory and others with potential stockouts. Do you adjust your production plan given the fluctuations? Eric: Technically...no. You need to understand that many of the employees have worked for the company for 10-20 yearsa few started when the company was first formed 25 years ago. As such, we try to ensure employees always work 8 hours a day and 5 days per week (totaling 40 hours per employee). In the past, we avoided overtime like the plague but with the sales plan you proposed, it might be necessary. The problem is that we can only add 20% more volume with overtime but the cost of the product will increase by 50%." You: "Are there any alternatives to overtime?" Eric: Yes. We have a company willing to produce our blends at a price of $4.00 per unit. The owners are hesitant of pursuing this plan for a variety of reasons but they don't want to discuss it." You: What are the consequences of having too much inventory or having stockouts? Eric: NutCo outgrew its warehouses long ago so we use an outside warehouse for excess inventory. When we send product to the warehouse at the end of the month, we charged for EVERYTHING...offloading the trailer, material handling, storage per pallet, loading customer trucks, paperwork, etc. We estimate it costs us approximately $1.75 per unit to store the product at the end of the month." You: "What's the alternative? Eric: "The alternative is to allow the inventory to have a stock-out but the issue with doing so will upset the customers some of them dropped us a year ago when the problems began while others were upset but we are shaky ground right now as a supplier. According to the sales department, the cost of a stock-out is about $1.50 per unit." You: "What are the objectives for this contract? Eric: Use the following monthly forecast to create the plan (remember the demand is in 000 units): Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2,570 2,090 3,540 2,140 1,710 2,290 1,660 4,370 3,940 4,030 4,200 3,340 Eric: Based on the inventory report, we should start Jan 2022 with 300K units. (NEXT PAGE) Scenario C: (3 Points) Properly enter the assumptions (blue cells) in the Scenario C. . (2 Points) Calculate an optimal production schedule where you can hire and layoff employees as needed (with no less than 5 employees and no more than 20 employees). You can also use up to 20% more units per month (due to overtime) and you can subcontract as many units as you need. (1 Points) Calculate the maximum profit under this scenario. (1 Point) Chart the results showing a stacked bar chart for the supply and a line chart for the demand

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