Helter Industries, a company that produces a line of woman\'s bathing suits, hir

Question

Helter Industries, a company that produces a line of woman's bathing suits, hires temporaries to help produce its summer product demand. For the current four-month roling schedule, there are three tempo on staff and 12 full-time employees. The temps can be hired when nooded and can bo used as neoded. whereas the full-time employees must be paid whether they are noodod or not Each full-time employee can produce 203 suits, while each part-time employee can produce 163 suits per month. Demand for bathing suits for the next four months is as follows: Beginning inventory in May is 401 comptoto (a complete two-piece includes both top and bottom) bathing suits. Bathmg suits cost $40 to produco and carrying cost is 36 porcont per year. Dovelop an aggregate plan that uses the 12 full-time employees each month and a minimum number of temporary employees. Assume that all employees will produce at their full potential each month. Calculate the inventory carrying cost associated with your plan using planned end of mo th levels.

Explanation / Answer

The question is about aggregate production plan, with the objective to hire minimum number of temp. workforce to meet the given demand with minimum costs.

There are 12 full-time employees who can produce 2436 (203*12) units per month. Each temorary worker can produce 163 units per month. Solution as per the format is as follows, with one additional row used for calculations of temp workforce

May June July August Demand 3220 2820 3120 3020 Beginning Inventory 401 106 48 16 Production required 2819 2714 3072 3004 Regular workforce 12 12 12 12 Regular production 2436 2436 2436 2436 Requirement deficit 383 278 636 568 Temp workforce 3 2 4 4 Temp production 489 326 652 652 Total production 2925 2762 3088 3088 Ending inventory 106 48 16 84 Inventory cost $ 127.2 57.6 19.2 100.8 Total Inventory cost $304.8 Inventory cost per unit per month=40*.36/12=1.2

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