Use the following information for questions 22-25 Company uses a level productio
ID: 2536429 • Letter: U
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Use the following information for questions 22-25 Company uses a level production strategy. The following information relates to their aggregate production planning activities QuarterDemand Forecast 75,000 100,000 75,000 125,000 2 Production Cost per unit SI0 Beginning Workforce 35 workers Production per Employee 1,250 units per quarter Hiring Cost - $500 per worker Firing Cost $1,000 per worker Inventory Carrying Cost $20 per unit per quarter 22. What is the required quarterly output? a. 75,000 b. 87,350 c. 93,750 d. e. 125,000 none of the above 23. How many/workers will be required? a. 35 b. 40 c. 100 d. e. 125 none of the above 24. How much inventory will there be at the end of quarter 3? 31,250 none of the above d. a. 18,750 b. 12,500 c. 25,650 c. 25. What is the total cost of your plan? $5,020,000 none of the above d. a. $1,250,000 b. $1,270,000 c. $5,000,000 e. 26. The process of breaking an aggregate plan into more detailed plans is referred to as d. e. rough-cut planning. none of the above a. collaborative planning. b. hierarchical planning. c. disaggregation.Explanation / Answer
22. Required quarterly output -
= (75,000 + 100,000 + 75,000 + 1,25,000) / 4
= 93,750 Units
23. Additional workers required -
Required quarterly output = 93,750
Actual Output = 35 x 1250 = 43,750
Additional units required = 50,000 (93,750-43,750)
Additional workers required = 50,000 /1 ,250
= 40 Workers
24. Inventory at the end of quarter 3 -
QUARTER 1
Quarterly output = 93,750
Less: Demand for Q1 = 75,000
Balance = 18,750 units
QUARTER 2
Quarterly output = 93,750
Add: Balance of Q1 = 18,750
Less: Demand for Q2 = 1,00,000
Balance = 12,500 units
QUARTER 3
Quarterly output = 93,750
Add: Balance of Q2 = 12,500
Less: Demand for Q3 = 75,000
Balance = 31,250 units
25. Total cost of plan -
a) Production cost = 3,75,000 x 10 = 37,50,000
b) Hiring cost of additional workers = 40 workers x 500 = 20,000
c) Inventory carrying cost = 12,50,000*
Therefore, Total cost of plan = $5,020,000
* { (18,750 x 20) + (12,500 x 20) + (31,250 x 20) }
26. Process of breaking an aggregate plan into more detailed plans is referred to as -
c) Disaggregation
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