The president of Hill Enterprises, Terri Hill, projects the firm\'s aggregate de
ID: 470781 • Letter: T
Question
The president of Hill Enterprises, Terri Hill, projects the firm's aggregate demand requirements over the next 8 months as follows: Her operations manager is considering a new plan, which begins in January with 200 units of inventory on hand. Stockout cost of lost sales is $125 per unit. Inventory holding cost is $20 per unit per month. Ignore any idle-time costs. The plan is called plan A. Plan A: Vary the workforce level to execute a strategy that produces the quantity demanded in the prior month. The December demand and rate of production are both 1.600 units per month. The cost of hiring additional workers is $55 per unit. The cost of laying off workers is $75 per unit. Evaluate this plan. (Enter all responses as whole numbers.)Explanation / Answer
Month
Demand
Production
Hire (units)
Layoff (units)
Ending Inventory
Stockouts (units)
December
1600
1600
200
January
1500
1600
0
0
300
0
February
1600
1500
0
100
200
0
March
1800
1600
100
0
0
0
April
1800
1800
200
0
0
0
May
2200
1800
0
0
0
400
June
2300
2200
400
0
0
500
July
1700
2300
100
0
100
0
August
1700
1700
0
600
100
0
Total
800
700
700
900
Ending Inventory = Production + ending inventory of previous month – Demand
Stockout cost = $125 per unit
Holding cost = $20 per unit per month
Hiring cost = $55 per unit
Layoff cost = $75 per unit
Total hiring cost = $55 x total hire (units) = $55 x 800 = $44,000
Total layoff cost = $75 x total layoff (units) = $75 x 700 = $52,500
Total inventory cost = $20 x total inventory hold = $20 x 700 = $14,000
Total Stockout cost = $125 x total stockout (units) = $125 x 900 = $112,500
Total Aggregated planning cost = $223,000
Month
Demand
Production
Hire (units)
Layoff (units)
Ending Inventory
Stockouts (units)
December
1600
1600
200
January
1500
1600
0
0
300
0
February
1600
1500
0
100
200
0
March
1800
1600
100
0
0
0
April
1800
1800
200
0
0
0
May
2200
1800
0
0
0
400
June
2300
2200
400
0
0
500
July
1700
2300
100
0
100
0
August
1700
1700
0
600
100
0
Total
800
700
700
900
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.