12:53 AM * 40% 4442336057183022245 Home Insert Draw Layout Review View Times New

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12:53 AM * 40% 4442336057183022245 Home Insert Draw Layout Review View Times New Roma12A .. A/ 4. Scotsburn Dairy (SD) makes over 300 types and sizes of ice cream and frozen yoghurt in its plant in Truro, Nova Scotia. For simplicity, we aggregate all the products. The plant manager has received the following aggregate demand forecasts (in units, i.e., 10,000 litres) for the next 12 months Jan Feb Mar Apr May Jun Jul Aug Sep Oc Nov Dec 140 160 190 180 180 220 240 210 170 170 160 130 A major consideration is product changeover/setup time. The manager estimates that out of 4.3 weeks per month, on average 1 week is spent for changeover/setup time. The production capacity of the plant is 1 unit or 10,000 litres per hour The plant manager uses the following labour schemes: 40 hours a week (1 shift; 10 hours a day for 4 days by permanent workers), 50 hours a week (40 10 hours of overtime on Fridays by permanent workers), and 80 hours a week (2 shifts; 10 hours a day for 4 days each; second shift is made of temp workers) The production cost of the 40-hour a week labour scheme (requiring 32 workers with various skills) is $78,276 per month. Overtime production cost is 1.5 times regular time production. A temp worker's production cost is approximately the same as a permanent worker's. a. Show that production by permanent workers during regular time is 132 units per month b. Show that labour cost of production during regular time is $593 per unit. c. Show that labour cost of production by permanent workers during overtime is $889.50 per unit d. If the average hiring cost of 32 temp workers on the second shift is $495 per person, show that hire cost per unit of product produced during their first month of employment is $120 Using tradeoff analysis show that using a temp worker (including the hiring cost) is cheaper that using permanent workers during overtime e. f. If temp workers are used for 4 consecutive months, determine these 4 months so that the initial inventory is 210 units, the ending inventory next Dec is 172 units, ending inventory each month is greater than 60 units, and sum of monthly ending inventories is minimum. Fill in the following table for your answer (including the inventories) or attach an Excel printout Period Forecast Output Jan Feb Mar Apr May Jun Jul Aug Sep OctNov Dec Total 40 160 190 180 180 220 240 210 170 170 160 130 2,150 Perm (Regular time) 132 132 132 132 132 132 132 132 132 132 132 132 1,584 Temp Inventory Beginning 210 Ending Cumul backorder

Explanation / Answer

b. Production cost per month by permanent workers=$78,276

Number of weeks worked per month=3.3 weeks

So, per week production cost=78276/3.3= $23720

Number of hours worked per week=40 hrs.

So, per hour cost=23720/40= $593.

In 1 hour 1 unit is produced, so cost per unit= $593.

a.Total production cost= 78276

Cost/unit=593

So, number of units produced per month=78276/593= 132

C.Overtime rate is 1.5 times of normal rate

Overtime rate/hr=593*1.5=889.50

d.Number of temporary workers hired=32

Average hiring cost/person= $495

So, total hiring cost on second shift=32*495= $15840

Units produced in second shift= 132

So, hire cost per unit= 15840/132=$120

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