Solve for columns Hire, Layoff, Ending Inventory, Stockouts. Please explain and
ID: 333649 • Letter: S
Question
Solve for columns Hire, Layoff, Ending Inventory, Stockouts. Please explain and show work. I am not understanding this at all, especially the Hire and Layoff columns. My book does not reference these at all.
The president of Hill Enterprises, Terri Hill, projects the firm's aggregate demand requirements over the next 8 months as follows 1,500 1,600 2,100 2,300 1,900 1,900 May January February March July 9 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 $80 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 1,500 in February incurs a cost of layoff for 100 units in February. 8 Hire Units Layoff (Units) Inventory Ending 0 Stockouts Units Period Month Demand Production 1,600 1,600 0 December 1,600 1,500 1,600 1,600 1,900 2,100 2,300 1,900 1,900 1 January 1,600 1,600 1,900 2,100 2,300 1,900 3 March 5 May 6 June 7 July 8 AugustExplanation / Answer
The Table above shows the answers:
For january: production was same as previous month, hence no hiring or layoff, but since the demand was less, hence extra 100 is added to inventory taking the inventory to 300.
february: 100 units worth layoffs were made, hence production 1500, but demand was 1600, so 100 units were used from inventory, taking the inventory to 200.
march: production was increase to 1600, so hiring of worth 100 units, demand was same as production hence inventory stays same.
april: production stays same as 1600, but demand 1900, hence 200 units were used from inventory still total demand satisfied = 1800, hence stockout = 100
may: production increased 300 units hence hiring cost incurred as shown, but demand is 2100, hence stockout of 200.
june: production increased 200 units, hence hiring cost incurred as shown, but demand is 2300 hence stockout of 200
july: production increased 200 units, hence hiring cost incurred as shown, but demand is 1900 hence inventory increases to 400 units
august: production reduced to 1900, hence layoff cost incurred for 400 units, demand same as production, hence inventory remains same.
total hiring cost = 5500 + 16500 + 11000 + 11000 = 44000
total layoff cost = 8000 + 32000 = 40000
total inventory (except december)= 300 + 200 + 200+ 400 + 400 = 1500
inventory cost = 20*1500 = 30000
total stockout = 100 + 200 + 200 = 500
total stockout cost = 500*125 = 62500
total cost = 44000 + 40000 + 30000 + 62500= 176500
Period Month Demand Production Hire Layoff Ending inventory Stockout 0 December 1600 1600 200 1 January 1500 1600 0 0 300 0 2 February 1600 1500 0 8000 200 0 3 March 1600 1600 5500 0 200 0 4 April 1900 1600 0 0 0 100 5 May 2100 1900 16500 0 0 200 6 June 2300 2100 11000 0 0 200 7 July 1900 2300 11000 0 400 0 8 August 1900 1900 0 32000 400 0Related Questions
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