A Juarez, Mexico, manufacturer of roofing supplies has developed monthly forecas

Question

A Juarez, Mexico, manufacturer of roofing supplies has developed monthly forecasts for a family of products. Data for the 6-month period January to June are presented in the table below. There are 8 hours of production per day Table 1 Other data Production Demand Inventory carrying cost Subcontracting cost per unit $12 per unit Average pay rate Overtime pay Rate $8 per unit per month Month Days Forecast 950 1 January 2 February 3 March 4 April 5 May 6 June $5 per hour ($40 per day) $7 per hour (above 8 hrs per day) 1.6 hrs per unit $300 per unit 18 21 21 750 1,000 1,300 1,050 Labor-hours per unit Cost of increasing daily production rate (hiring& training) Cost of decreasing daily $600 per unit rate This exercise only contains part b. b) Juarez has yet a sixth plan. A constant workforce of 7 is selected, with the remainder of demand filled by subcontracting. Evaluate this plan. The production rate per day units. (Enter your response as a whole number) Fill in the table below. (Enter your responses as whole numbers.)

Explanation / Answer

Daily production rate = 8 hours per day * 7workers / 1.6 hours per unit = 35 units

Regular time labor cost per unit = 1.6 * 5 = $8

Total regular time production = 4340 units

Total regular time labor cost = 4340 * 8 = $34,720

Total Subcontracting cost = 1460 * 12 = $17,520

Total cost of plan 6 = 34720 + 17520 = $52,240

Month prod days demand forecast demand per prod. day regular prod sub contract Jan 22 950 43.2 770 180 Feb 18 750 41.7 630 120 Mar 21 750 35.7 735 15 Apr 21 1000 47.6 735 265 May 22 1300 59.1 770 530 June 20 1050 52.5 700 350 Total 4340 1460

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