Use the following data to answer questions 13-16 A Company policy calls for keep
ID: 350152 • Letter: U
Question
Use the following data to answer questions 13-16
A Company policy calls for keeping safety-stock equal to 25% the forecasted demand for that month. The company currently has a work force of 12 people.
Demand Data
Jan.
Feb.
March
Beg. Inventory
200
Forecast demand
500
300
600
Production Data
Labor hours/unit
3
Cost Data
Workdays/month
20
Labor cost/hour-straight time
$14
Work hours/day
8
Labor cost/hour-overtime
$21
13.(3) The production requirement for the month of February is
a) 300
b) 100
c) 225
d) 250
e) none of the above
14.(3) The beginning inventory for the month of March is
a) 60
b) 75
c) 100
d) 150
e) none of the above
15.(3) The number of units current work force of 12 workers can produce in a month during regular time is
a) 960
b) 800
c) 640
d) 600
e) none of the above
16.(3) The number of workers needed to produce 960 units in a month is
a) 18
b) 16
c) 15
d) 12
e) none of the above
17.(7) You must submit the work in Assignments to earn credit for this problem.
The following table gives the demand and production plan for an organization.
January February March April
Demand 900 800 1,400 1,300
Production plan 1,100 1,100 1,100 1,100
The initial inventory is zero. The inventory holding cost is $2 per unit per month. The total inventory holding cost for the plan is:
a) $1800
b) $1400
c) $1000
d) $800
e) None of the above
18.(10) You must submit the work in Assignments to earn credit for this problem.
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 above
Demand Data
Jan.
Feb.
March
Beg. Inventory
200
Forecast demand
500
300
600
Production Data
Labor hours/unit
3
Cost Data
Workdays/month
20
Labor cost/hour-straight time
$14
Work hours/day
8
Labor cost/hour-overtime
$21
Explanation / Answer
13(3)
safety stock is 25%.
hence total stock required for jan: = 500 + 25%*500 = 625
inventory at end of Jan = 625 - 500 = 125
total required production for Feb = 300 + 25%*300 = 375
Initial inventory = 125
required production for feb = 375 - 125 = 250
option d; 250
14(3)
beginning invevtory for march = ending inventory for feb
feb total production as calculated above = 375
demand = 300
Hence inventory = 375 - 300 = 75
option b, 75
15(3)
no. of days in month = 20
no. of hours per day = 8
total no. of hours per month = 20*8 = 160
total hours used by 12 workers = 160*12 = 1920
it takes 3 hours per unit to produce
hence capacity = 1920/3 = 640
option c, 640
16(3)
production required = 960
total production hours required = 960*3 = 2880
total hours per labor = 20*8 = 160
no. of workers required = 2880/160 = 18
option a, 18
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