Complete part B) and TOTAL REGULAR PRODUCTION COST = $ TOTAL SUBCONTRACTING COST
ID: 383190 • Letter: C
Question
Complete part B)
and
TOTAL REGULAR PRODUCTION COST = $
TOTAL SUBCONTRACTING COST = $
TOTAL COST = $
A Juarez, Mexico, manufacturer of roofing supplies has developed monthly forecasts for a family of products. Data for the 6-month period January to June are presented in the table below. There are 8 hours of production per day. a) The firm would like to begin development of an aggregate plan. For this plan, plan 5, the firm wishes to maintain a constant workforce of 6, using subcontracting to meet remaining demand. Evaluate this plarn To determine whether this plan is desirable, first calculate demand per day for each month (enter your responses rounded to the nearest whole numb er) Table 1 Avg Dem Per Other data Production Demand Prod. Day Inventory carrying cost $5 per unit per montlh Month Days Forecast 950 750 750 1,000 1,300 1,050 Subcontracting cost per unit $10 per unit Average pay rate Overtime pay Rate 1 January 2 February 3 March 4 April 5 May 6 June $5 per hour ($40 per day) $7 per hour (above 8 hrs per 43 42 36 48 59training) 53 Cost of decreasing daily 18 21 21 Labor-hours per unit Cost of increasing daily production rate (hiring & 1.6 hrs per unit $300 per unit 20 $600 per unit roduction rate (layoffsExplanation / Answer
We can find regular production by multiplying production rate by number of days for production in each month. The rest of the demand goes in Subcontracting.
Hence, the table looks like :
Total Regular Production Cost = Number of workers * Average pay rate per day * Total days of production
= 7 * $40 * ( 22 + 18 + 21 + 21 + 22 + 20) = $34,720
Total Subcontracting Cost = Subcontracting cost per unit * Total units subcontracted
= $10 * ( 180 + 120 + 15 + 265 + 530 + 350 ) = $14,600
Total Cost = $49,320
Month Demand Regular Prod. Subcontract 1 January 950 770 180 2 February 750 630 120 3 March 750 735 15 4 April 1,000 735 265 5 May 1,300 770 530 6 June 1,050 700 350Related Questions
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