7.DAT, Inc., needs to develop an aggregate plan for its product line. Relevant d

Question

7.DAT, Inc., needs to develop an aggregate plan for its product line. Relevant data are Production time 2 hour per unit Straight labor cost $10 per hour Workweelk Days per month 20 workdays per month Beginning inventory 500 units Safety stock One-half month 5 days, 8 hours each day Shortage cost $20 per unit per month $5 per unit per month Carrying cost The forecast for next ycar is IAN FrB. MAL Art. MAY JUNE JULY Ava, Ser· Oct. No. Dic. 2500 3,000 4000 3,500 3500 3000 3.000 4000 4000 4000 3000 3000 Management prefers to keep a constant workforce and production level, absorbing variations in demand through inventory excesses and shortages. Demand not met is carried over to the following month. A. Calculate the number of employees needed. Point -3 B. Calculate Actual production for January only. Point-2 C. Calculate the ending inventory for January only.Point-3

Explanation / Answer

For constant production level and constant manpower, you must compile the production for full year and take average for the month that needs to products

Avg Production/ month = Total Demand - Current Inventory / No of Month = (40500 - 500)/12 = 3333.33 = 3334 units per month shoud be produced.

Total working hours per month = no of working day * working hours per day = 20 * 8 = 160 hours per month

Answer a)

Manpower Needed for the January production

Total working hours = No of units * time per unit for production = 3334 * 2 = 6668 hours

Max 160 hours can be worked by a worker so no of worker needed = 6668 / 160 = 41.7 = 42 manpower needed each month for production.

Answer b)

Production for all the months is constant as calculated above which is 3334 units per month.

January Production = 3334 units

Answer c)

Ending Inventory = Starting Inventory + Production - Demand

= 500 + 3334 - 2500

= 1334 units in invetory

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