29) Angela has started a business creating personalized bobble-heads. Below is h

Question

29) Angela has started a business creating personalized bobble-heads. Below is her current schedule and anticipated demand.

Month            Expected Demand              Production Days                 Demand/Day

Jan.                  700                                         24                                            30

Feb.                 1200                                       20                                            60

March             850                                         22                                            39

April                1100                                       21                                            53

May                 970                                         23                                            43

Inventory carrying costs are $3/unit. Regular time labor is $9/hr. Workers work for 8 hours/day. It takes 2 hours to complete one bobble-head. The subcontracting cost/unit is $22. Hiring employees cost $200 and firing them cost $400.

If Angela wants to have a constant workforce, utilizing a pure level strategy. She currently employees 11 workers in the production process. The total cost of this aggregate plan are most nearly,

A. 880

B. 7920

C. 1630

D. 88750

E. 87120

Explanation / Answer

Each worker does 4 bubble heads.

The total cost of aggregate plan = 88750

Option D

Month Exp Demand Production days Demand/Day Production / month Jan 700 24 30 720 Feb 1200 20 60 1200 Mar 850 22 39 858 Apr 1100 21 53 1113 May 970 23 43 989

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