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 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: MAY JUNE JULY AUGUST 3,270 2,870 3,170 3,070 Beginning inventory in May is 408 complete (a complete two-piece includes both top and bottom) bathing suits. Bathing suits cost $40 to produce and carrying cost is 36 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 3,270   2,870   3,170   3,070     Beginning inventory               Production required               Regular workforce               Regular production               Temp workforce               Temp production               Total production               Ending inventory               Inventory cost $    $    $    $                   $               

Explanation / Answer

        May         June         July         August   Forecast         3,270         2,870         3,170          3,070   Beginning inventory = Ending - Forecast             408               63             118                36   Production required         3,270         2,870         3,170          3,070   Regular workforce               12               12               12                12   Regular production = 12 x 203         2,436         2,436         2,436          2,436   Temp workforce                 3                 3                 4                  4   Temp production = no of temp workforce x 163             489             489             652              652   Total production = regular production x Temp production         2,925         2,925         3,088          3,088   Ending inventory = Opening + Production -Demand               63             118               36                54   Inventory cost = Total inventory available for sale x 40 + Ending inventory x 40 x 36% $ 134,227 $ 121,219 $ 128,758 $ 125,738                $ 509,942

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