Wiedmer Corporation is preparing an aggregate production plan for widgets for ne

Question

Wiedmer Corporation is preparing an aggregate production plan for widgets for next four months. The company's expected monthly demand is given below in the chart. The company will have 50 widgets in inventory at the beginning of the first month and desires to maintain at least that number at the end of each month. Below is other critical data: Production cost per unit- $50 Inventory Carrying cost per month per unit $10 (based on ending month inventory) Hiring Cost per worker -$300 Firing cost per worker = $200 Beginning # of workers-16 Each worker can produce = 50 units per month. LEVEL PLAN Beginning Inventory: 50 Beginning Workers: 16 Month Ending Regular Production Demand Overtime Workers Hire Fire Inventory Required 1,000 1,200 1,500 1,300 4 Total 22. What is the regular monthly actual production for a level plan? a. 800 b. 1,000 c. 1,250** d. 1500 23. What is the total inventory carrying cost for the level plan? a. b. 6,000 c. 6,500 d. 8,000*

Explanation / Answer

the level production plan is given above:

current production with 16 workers = 16*50 = 800

we need total production of 5000 in 4 months, for level production we need production per month = 5000/4 = 1250

22) option C, 1250 for level production.

for this we need to hire 9 additional workers.

23) total inventory during the 4 months = 800

carrying cost = 10

hence total inventory cost = 800*10 = 8000

option D, 8000

Month Demand Regular overtime ending inventory workers required hire fire 1 1000 1250 0 300 25 9 0 2 1200 1250 0 350 25 0 0 3 1500 1250 0 100 25 0 0 4 1300 1250 0 50 25 0 0 total 5000 5000 0 800 9 0

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