eGo is an electric scooter manufacturer in Texas

1. eGo is an electric scooter manufacturer in Texas. The plant currently employs 80 workers who operate for 22 days a month, eight hours each day. Workers are paid $12 per hour for normal working hours and $18 per hour for overtime. Overtime is limited to a maximum of 25 hours per month per employee. One worker can assemble a scooter every 12 minutes. Component costs for each scooter is $40. Carrying inventory from one month to the next incurs a cost of $5 per scooter per month. Assume the starting inventory of 24,500 units and eGo wants to end the year with the same level of inventory. eGo is making production plans for the coming year. Below table shows the forecasted monthly demand.

Month Demand Month   Demand

January 58,000 July 76,000

February 81,000 August 67,000

March 70,000 Sept 75,000

April 93,000 Oct 54,000

May 61,000 Nov 58,000

June 82,000 Dec 66,000

(a) Assuming no backlogs, no subcontracting, no layoffs, and no new hires, solve the aggregate planning to find the optimal production schedule. (Hint: First, formulate the problem and then use Excel Solver to find the optimal results.)

(b) Assume A third party is offering to produce scooters at a cost of $44 per unit (including the component costs). Solve the aggregate planning problem to determine how eGo should use the third party. (Hint: Reformulate the problem by adding the third party option into the model and again use Excel Solver to find the optimal results.).

2. Discuss how eGo can respond to predictable demand variability by managing supply and demand. (Hint: Relate to the sales and operations planning strategies in Chapter 9 of the textbook.)

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