Edit View History Bookmarks Develop Window Help ezto.mheducation.com Problem 19-
ID: 357126 • Letter: E
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Edit View History Bookmarks Develop Window Help ezto.mheducation.com Problem 19-7 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 workdorce 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 "o" wherever required. Nogative 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.) Forecast Beginning inventory Production required Production hours required Production hours available Overtime hours Temp workers2 Temp worker hours available Total hours available Actual production Ending inventory Workers hired Workers laid off 10,300 515 8,200 6,800 12,300 0. all Winter Straight time $
Explanation / Answer
Total Cost Calculation of Production Plan:
Total Cost of Production Plan
Fall
Winter
Spring
Summer
Forecast
10,300
8,200
8,800
12,300
Beginning Inventory
515
-2,585
0
0
Production Required (forecast -Inventory)
9,785
10,785
8,800
12,300
Production Hours Required (Production Required/0.5)
19,570
21,570
17,600
24,600
Production Hours Available (Regular workforce) (30 worker *8 hours * 60 days)
14,400
14,400
14,400
14,400
Over Time Hours
0
7,170
3,200
0
Temp Workers
0
0
0
22
Temp Workers Production Hours Available (22 Temp worker *8 hours * 60 days)
0
0
0
10,560
Total Hours Available
14,400
21,570
17,600
24,960
Actual Production (Total Hours Available*0.5)
7,200
10,785
8,800
12,480
Ending Inventory
0
0
0
180
Ending Backorders
2,585
0
0
0
Workers hired
0
0
0
22
Workers laid-off
0
0
0
22
Total Cost of Production Plan
Fall
Winter
Spring
Summer
Forecast
10,300
8,200
8,800
12,300
Beginning Inventory
515
-2,585
0
0
Production Required (forecast -Inventory)
9,785
10,785
8,800
12,300
Production Hours Required (Production Required/0.5)
19,570
21,570
17,600
24,600
Production Hours Available (Regular workforce) (30 worker *8 hours * 60 days)
14,400
14,400
14,400
14,400
Over Time Hours
0
7,170
3,200
0
Temp Workers
0
0
0
22
Temp Workers Production Hours Available (22 Temp worker *8 hours * 60 days)
0
0
0
10,560
Total Hours Available
14,400
21,570
17,600
24,960
Actual Production (Total Hours Available*0.5)
7,200
10,785
8,800
12,480
Ending Inventory
0
0
0
180
Ending Backorders
2,585
0
0
0
Workers hired
0
0
0
22
Workers laid-off
0
0
0
22
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