Please show all your work. A company has the following forecast demand for the n
ID: 349223 • Letter: P
Question
Please show all your work.
A company has the following forecast demand for the next five months: 1,600, 2,400, 3,200, 2,800, and 2,400. The following information is also available current work force- 15 workdays/month - 20 labor hours/unit 2 working time/day 8 hiring cost/worker = $100 layoff cost/worker = $50 Inventory, stockouts, overtime, and subcontracting are not allowed. Only hiring and layoff are allowed to respond to fluctuations in demand. The total cost of hiring and layoff during the five-month period will be: a) $1,500 b) $3,750 c) $2,250 d) $3,000 e) None of the aboveExplanation / Answer
Total amount of hours available in a month = Working time / day x Workdays/ month = 8 x 20 = 160 hours
Time it takes to produce 1 unit by any worker = 2 hours
Therefore productivity per worker per month = 160 /2 = 80 units
Current workforce = 15
Therefore , regular production capacity of 15 workers per month = 80 x 15 = 1200
Increase or decrease in production by addition or subtraction of 1 worker =80
Following are the hiring / layoff plans on basis of above assumptions and calculations :
Month 1
Month 2
Month 3
Month 4
Month 5
Forecast demand
1600
2400
3200
2800
2400
Steady production ( basis 15 nos. current workforces )
1200
1200
1200
1200
1200
Additional production requirement ( = Forecast demand – Steady production )
400
1200
2000
1600
1200
Additional number of workers required ( Additional production / 80 )
5
15
25
20
15
Workers hired
5
10
10
Workers laid off
5
10
Thus,
Total number of workers hired = 5 + 10 + 10 = 25
Total number of workers laid off = 5 + 10 = 15
Total cost of hiring = $100 / worker x 25 = $ 2500
Total cost of lay off = $50 / worker x 15 = $750
Thus. Total cost of hiring and lay off = $2500 + $750 = $3250
ANSWER ; e ) NONE OF THE ABOVE
Month 1
Month 2
Month 3
Month 4
Month 5
Forecast demand
1600
2400
3200
2800
2400
Steady production ( basis 15 nos. current workforces )
1200
1200
1200
1200
1200
Additional production requirement ( = Forecast demand – Steady production )
400
1200
2000
1600
1200
Additional number of workers required ( Additional production / 80 )
5
15
25
20
15
Workers hired
5
10
10
Workers laid off
5
10
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