Develop a production plan and calculate the annual cost for a firm whose demand
ID: 331976 • Letter: D
Question
Develop a production plan and calculate the annual cost for a firm whose demand forecast is fall, 10,300; winter, 8,200; spring, 6,800; summer, 12,300. Inventory at the beginning of fall is 515 units. At the beginning of fall you currently have 30 workers, but you plan to hire temporary workers at the beginning of summer and lay them off at the end of summer. In addition, you have negotiated with the union an option to use the regular workforce on overtime during winter or spring only if overtime is necessary to prevent stockouts at the end of those quarters. Overtime is not available during the fall. Relevant costs are hiring, $80 for each temp; layoff, $160 for each worker laid off; inventory holding, $5 per unit-quarter; backorder, $10 per unit; straight time, $5 per hour; overtime, $8 per hour. Assume that the productivity is 0.5 unit per worker hour, with eight hours per day and 60 days per season. In each quarter, produce to the full output of your regular workforce, even if that results in excess production. In Winter and Spring, use overtime only if needed to meet the production required in that quarter. Do not use overtime to build excess inventory in prior seasons expressly for the purpose of reducing the number of temp workers in Summer. (Leave no cells blank - be certain to enter "0" wherever required. Negative values should be indicated by a minus sign. Round up "Number of temp workers, Workers hired and Workers laid off" to the next whole number and all other answers to the nearest whole number.)
Develop a production plan and calculate the annual cost for a firm whose demand forecast is fall, 10,300; winter, 8,200; spring, 6,800; summer, 12,300. Inventory at the beginning of fall is 515 units. At the beginning of fall you currently have 30 workers, but you plan to hire temporary workers at the beginning of summer and lay them off at the end of summer. In addition, you have negotiated with the union an option to use the regular workforce on overtime during winter or spring only if overtime is necessary to prevent stockouts at the end of those quarters. Overtime is not available during the fall. Relevant costs are hiring, $80 for each temp; layoff, $160 for each worker laid off; inventory holding, $5 per unit-quarter; backorder, $10 per unit; straight time, $5 per hour; overtime, $8 per hour. Assume that the productivity is 0.5 unit per worker hour, with eight hours per day and 60 days per season. In each quarter, produce to the full output of your regular workforce, even if that results in excess production. In Winter and Spring, use overtime only if needed to meet the production required in that quarter. Do not use overtime to build excess inventory in prior seasons expressly for the purpose of reducing the number of temp workers in Summer. (Leave no cells blank - be certain to enter "0" wherever required. Negative values should be indicated by a minus sign. Round up "Number of temp workers, Workers hired and Workers laid off" to the next whole number and all other answers to the nearest whole number.)
Explanation / Answer
Production Plan as per the data provided :
Note : Amount shown in the above tables are in $.
Working Notes :
Some formulas that are used to calculate the figures in the above tables
?Rest all the calculations are done with the help of data provided in the question (simple Mathematics with the units and rates provided)
FALL WINTER SPRING SUMMER Forecast 10,300 8,200 6,800 12,300 Beginning Inventory 515 -2585 0 400 Production required 9,785 10,785 6,800 11,900 Production hours required 652 720 454 794 Production hours available1 480 480 480 480 Overtime hours 0 240 0 0 Temp workers2 0 0 0 20 Temp worker hours available 0 0 0 314 Total hours available 480 720 480 794 Actual production 7,200 10,785 7,200 11,900 Ending inventory 0 0 400 0 Workers hired 30 30 30 30 Workers laid off 0 0 0 20Related Questions
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