A local company makes athletic clothing and they are preparing aggregate product

Question

A local company makes athletic clothing and they are preparing aggregate production plans on a quarterly basis for the coming year for their line of women's wear. They have the following information available to develop a level capacity and a matching (chase) demand plan:

(Assume that pattern of demand repeats each year, that is the demand in quarter 4 of the previous year was 13,000 units)

Number of working days per quarter = 65 days

Number of hours per day per person = 8 hours

Labor to produce one unit = 5 hours

Demand for four quarters respectively:

12,300, 12,500, 12,200, 13,000 units

Cost of hiring a worker = $800

Cost of laying off a worker = $500

Inventory carrying cost per unit per year = $60

Using a level capacity plan, how many workers are needed each quarter?

A) 118

B) 121

C) 125

D) 130

E) 134

Explanation / Answer

Average demand for four quarters = (12300+12500+12200+13000)/4 = 12500 units

Each qaurter 12500 units need to be produced

Time required to produce 12500 units = 12500*5 = 62500 hours

Number of working hours per person per qaurter = 65*8 = 520

Number of workers required = 62500/520 = 120.192 = 121(rounding off)

Therefore ans is

B)121

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