JokersRWild makes playing cards in several different styles, but a “standard” de
ID: 335778 • Letter: J
Question
JokersRWild makes playing cards in several different styles, but a “standard” deck of cards is used for planning purposes. The average worker at JokersRWild can make 10,000 sets of decks of cards per month at a cost of $1.80 per deck during regular production and $2.10 during overtime. The company currently employs 19 workers. Experience shows that it costs $900 to hire a worker and $900 to fire a worker. Inventory carrying cost is $.33 per deck per month.
The beginning inventory is 44,000, and at least that amount is desired each month. Assume hiring and layoff/firing, if necessary, occur at the beginning of the month.
Explanation / Answer
c.
Ending inventory = Regular Production + Overtime Production + Previous month inventory – Demand
Overtime = Demand – regular production – previous month inventory + 44,000 units
Regular + OT
Month
Demand
. Regular Production
Overtime Production
Ending Inventory
Workers Required
Hire
Fire layoff
44000
Jan
150,000
19*10,000
= 190000
84,000
19
0
0
Feb
190,000
190000
84,000
19
0
0
Mar
120,000
190000
154,000
19
0
0
Apr
370,000
190000
70,000
44,000
19
0
0
May
380,000
190000
190,000
44,000
19
0
0
Jun
410,000
190000
220,000
44,000
19
0
0
Total
1,620,000
1,140,000
480,000
454,000
0
0
Unit cost rate
$1.8
$2.1
$0.33
Total cost
$2,052,000
$1,008,000
$149,820
Total cost of Plan
$3,209,820
D. Total cost of chase plan (with OT) = $3,209,820
E. Plan: Chase – Hire and fire
Regular production = Demand
Month
Demand
Regular Production
Overtime Production
Ending Inventory
Workers Required
Hire
Fire layoff
44000
19
Jan
150,000
150,000
44,000
15
19-15
= 4
Feb
190,000
190,000
44,000
19
4
Mar
120,000
120,000
44,000
12
7
Apr
370,000
370,000
0
44,000
37
25
May
380,000
380,000
0
44,000
38
1
Jun
410,000
410,000
0
44,000
41
3
Total
1,620,000
1,620,000
0
264,000
33
11
Unit cost rate
$1.8
$2.1
$0.33
$900
$900
Total cost
$2,916,000
$0
$87,120
$29,700
$9,900
Total cost of Plan
$3,042,720
F. Total cost of chase plan (with changing workforce level) = $3,042,720
Month
Demand
. Regular Production
Overtime Production
Ending Inventory
Workers Required
Hire
Fire layoff
44000
Jan
150,000
19*10,000
= 190000
84,000
19
0
0
Feb
190,000
190000
84,000
19
0
0
Mar
120,000
190000
154,000
19
0
0
Apr
370,000
190000
70,000
44,000
19
0
0
May
380,000
190000
190,000
44,000
19
0
0
Jun
410,000
190000
220,000
44,000
19
0
0
Total
1,620,000
1,140,000
480,000
454,000
0
0
Unit cost rate
$1.8
$2.1
$0.33
Total cost
$2,052,000
$1,008,000
$149,820
Total cost of Plan
$3,209,820
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