The president of Hill Enterprises, Terri Hill, projects the firm\'s aggregate de

Question

The president of Hill Enterprises, Terri Hill, projects the firm's aggregate demand requirements over the next 8 months as follows January February March 1,400 1,600 1,700 1,700 May June 2,300 2,200 1,900 1,900 ust 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 520 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.) Note: Both hiring and layoff costs are incurred in the month of the change. For example, going from 1,600 in January to 1,400 in February incurs a cost of layoff for 200 units in February. Ending Invento 200 Hire Layoff Units Stockouts Units Period Month Demand Production (Units) 1,600 0 December 1.600 1 January 1,400 1,600 | 2 February 3 March 4 April 5 May 1,600 1,700 1,700 1,400 1,600 1,700 2,300,700 2.200 2.300 2,200 1,900 une 7 July 8 August 1,900 1,900 The total cost of hirings S(Enter your response as a whole number) The total cost of layoffs $ (Enter your response as a whole number.) The total inventory carrying cost S(Enter your response as a whole number) The total stockout cost = $| |. (Enter your response as a whole number) Enter your answer in each of the answer boxes

Explanation / Answer

A B C A*$55 B*$75 C*$125 Period Month Demand Production Hire Layoff Ending Stockout Hiring Layoff Stockout (Units) (Units) Inventory (Units) Costs Costs Costs 0 December 1600 1600 200 1 January 1400 1600 400 2 February 1600 1400 200 200 $        15,000 3 March 1700 1600 200 100 $        11,000 4 April 1700 1700 100 100 $          5,500 5 May 2300 1700 0 500 $        62,500 6 June 2200 2300 600 100 $        33,000 7 July 1900 2200 100 400 $          7,500 8 August 1900 1900 300 400 $        22,500 TOTAL $        49,500 $        45,000 $        62,500 The total Cost of Hiring= $ 49,500 The total Cost of Layoffs= $ 45,000 The total stockout cost= $ 62,500

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