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

Question

Helter Industries, a company that produces a line of women's bathing suits, hires temporaries to help produce its summer product demand. For the current four-month rolling schedule, there are three temps on staff and 12 full-time employees. The temps can be hired when needed and can be used as needed, whereas the full-time employees must be paid whether they are needed or not. Each full-time employee can produce 214 suits, while each part-time employee can produce 174 suits per month.

     Beginning inventory in May is 407 complete (a complete two-piece includes both top and bottom) bathing suits. Bathing suits cost $30 to produce and carrying cost is 24 percent per year.

     Develop 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 month levels. (Round "Inventory cost" to 2 decimal places.)

Helter Industries, a company that produces a line of women's bathing suits, hires temporaries to help produce its summer product demand. For the current four-month rolling schedule, there are three temps on staff and 12 full-time employees. The temps can be hired when needed and can be used as needed, whereas the full-time employees must be paid whether they are needed or not. Each full-time employee can produce 214 suits, while each part-time employee can produce 174 suits per month.

     Demand for bathing suits for the next four months is as follows:

Explanation / Answer

Based on the demand forecast and inventory, the desired production is calculated. Since there are 12 fixed employees there will always be production of 2568 units. The difference between the demand + inventory and total produced by permemant employees gives the production requirement from temp employees which is shown as excess required. The formula ROUNDUP(<excess required>/174,0) gives the number of temp employees needed to cover the difference. Roundup is used since temp employees cannot be in deicmals. The number of employees x 174 gives the total production by temp employees.

Beginning inventory + Total produced be permanant + Total produced by temp - Demand forecast gives the ending inventory at the end of the month which will be the beginning inventory for the next month

Ending inventory x 30 gives the inventory cost

Inventory cost x 0.24 gives the inventory carrying cost for that month

The number of temp employees and the total inventory carrying cost is thus given in the calucations above

        May         June         July         August   Forecast 3260 2860 3160 3060   Beginning inventory 407 344 292 292   Production required 2853 2516 2868 2768   Regular workforce 12 12 12 12   Regular production 2568 2568 2568 2568   Temp workforce 2 0 2 2 Excess required 285 0 300 200   Temp production 348 0 348 348   Total production 2916 2568 2868 2768   Ending inventory 344 292 292 292   Inventory cost ($) 10320 8760 8760 8760 Inventory carrying cost ($) 2476.80 2102.40 2102.40 2102.40 Total inventory carrying cost ($)          8784.00            

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