Develop a production plan and calculate the annual cost for a firm whose demand forecast is: fall, 10,100; winter, 8,400; spring
, 7,000; summer, 12,100. Inventory at the beginning of fall is 505 units. At the beginning of fall you currently have 35 workers, but you plan to hire temporary workers at the beginning of summer and lay them off at the end of summer. In addition, you have negotiated with the union an option to use the regular workforce on overtime during winter or spring if overtime is necessary to prevent stock-outs at the end of those quarters. Overtime is not available during the fall. Relevant costs are hiring, $90 for each temp; layoff, $180 for each worker laid off; inventory holding, $5 per unit-quarter; backorder, $10 per unit; regular time, $5 per hour; overtime, $8 per hour. Assume that the productivity is 0.5 unit per worker hour, with eight hours per day and 60 days per season. In each quarter, produce to the full output of your regular workforce, even if that results in excess production. In Winter and Spring, use overtime only if needed to meet the production required in that quarter. Do not use overtime to build excess inventory in prior seasons expressly for the purpose of reducing the number of temp workers in Summer.
1 answer:
Answer:
Check the explanation
Explanation:
Fall Winter Spring Summer
Forecast 10,100 8,400 7,000 12,100
Beginning Inventory 505 -1,195 0 1,400
Production required 9,595 9,595 7,000 10,700
Production hours required 19,190 19,190 14,000 21,400
Production hours available1 16,800 16,800 16,800 16,800
Overtime hours 0 2,390 0 0
Temp workers2 0 0 0 10
Temp worker hours available 0 0 0 4,800
Total hours available 16,800 19,190 16,800 21,600
Actual production 8,400 9,595 8,400 10,800
Ending inventory -1,195 0 1,400 100
Workers hired 0 0 0 10
Workers laid off 0 0 0 10
Fall Winter Spring Summer
Straight Time $84,000 $84,000 $84,000 $108,000
Overtime 0 $19,120 $0 $0
Inventory $0 $0 $7,000 $500
Backorder $11,950 $0 $0 $0
Hiring $0 $0 $0 $900
Layoff $0 $0 $0 $1,800
Total $95,950 $103,120 $91,000 $111,200
Annual Cost $401,270
kindly check the calculation in the image below.
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