A key hospital supplier, IVs Plus (IVP) located in Salina, KS sells IV tubing an
ID: 445560 • Letter: A
Question
A key hospital supplier, IVs Plus (IVP) located in Salina, KS sells IV tubing and stands to hospitals and clinics. Sales have picked up ever since they introduced their newest “Squeaky Clean” IV stand, which eliminates all oils and germs left behind by users. Though IVP sells these stands all year long, they sell the most during the summer months, when end-of-fiscal year purchases are at a peak. The demand over the next 12 months is shown in the table below. Use the demand forecasts and determine the lowest cost production plan.
Month
Demand Forecast
Month
Demand Forecast
January
133,067
July
251,630
February
155,026
August
249,630
March
168,200
September
200,312
April
173,890
October
160,830
May
202,759
November
145,266
June
260,842
December
128,900
Regular production cost
$35 per unit
Holding cost
$9 per unit per month based on ending inventory
Backorder cost
$14.00 per unit per month based on ending inventory
Beginning Inventory
200,000 units
Beginning workforce
10 employees
Regular production rate
13,750 units per employee per month
Hiring cost
$9,000 per worker
Firing cost
$10,500 per worker
How many workers are required in July following the chase production strategy?
Month
Demand Forecast
Month
Demand Forecast
January
133,067
July
251,630
February
155,026
August
249,630
March
168,200
September
200,312
April
173,890
October
160,830
May
202,759
November
145,266
June
260,842
December
128,900
Explanation / Answer
Workers needed in July are = 251630 / 13750 = 19
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.