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 201 suits, while each part-time employee can produce 161 suits per month. Demand for bathing suits for the next four months is as follows: MAY JUNE JULY AUGUST 3,230 2,830 3,130 3,030 Beginning inventory in May is 403 complete (a complete two-piece includes both top and bottom) bathing suits. Bathing suits cost $40 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.) May June July August Forecast 3,230 2,830 3,130 3,030 Beginning inventory Production required Regular workforce Regular production Temp workforce Temp production Total production Ending inventory Inventory cost $ $ $ $ $

Explanation / Answer

Answer:

Particulars May June July August Demand (units) 3230 2830 3130 3030 Opening Inventory 403 68 133 59 Production during month; Full time Employee 12x201 = 2412 2412 2412 2412 Part time Employee 3X161 = 483 3X161 = 483 4X161 = 644 4X161 = 644 Total Production 2895 2895 3056 3056 Closing Inventory 3230 - 403 - 2895 = 68 133 59 85 Inventory Carrying Cost @ 24/12 = 2% per month $ 40 x 68 x 2% = $ 54.40 $ 106.40 $ 47.20 $ 68

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