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ID: 434305 • Letter: H
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home / study / business / operations management / operations management questions and answers / sawyer furniture is one of the few remaining domestic manufacturers of wood furniture. in the ... Your question has been answered Let us know if you got a helpful answer. Rate this answer Question: Sawyer Furniture is one of the few remaining domestic manufacturers of wood furniture. In the cur... Sawyer Furniture is one of the few remaining domestic manufacturers of wood furniture. In the current competitive environment, cost containment is the key to its continued survival. Demand for furniture follows a seasonal demand pattern with increased sales in the summer and fall months, culminating with peak demand in November. The cost of production is $16 per unit for regular production, $24 for overtime, and $33 for subcontracting. Hiring and firing costs are $500 per worker. Inventory holding costs are $20 per unit per month. There is no beginning inventory. Ten workers are currently employed. Each worker can produce 50 pieces of furniture per month. Overtime cannot exceed regular production. Given the following demand data:
b. Design a production plan using a chase demand strategy. Calculate the cost of the plan. Put the solution in a separate worksheet in this file and label it.
10 50 $500 $500 $20 Input: Beg. Wkrs Units/wkr Regular $16 Hirin Overtime $24 Firing Subk Cost $0 Beg. Inv $33 Invento Month Jan Feb Mar ?? Demand 500 500 1000 1200 2000 400 400 1000 1000 1500 7000 500 17,000 Re Subk Inv #Wkrs | #Hired | #Fired Jun Jul Au Oct Nov Dec Total 0Explanation / Answer
Considering the chase demand strategy and to minimize the cost, the following production planning is the best suitable for the low cost.
Month Demand Regular Overtime Subcontract Inventory #workers #Hired #Fired Cost Jan 500 500 0 0 0 10 0 0 $5,000 Feb 500 500 0 0 0 10 0 0 $5,000 Mar 1000 1000 0 0 0 20 10 0 $15,000 Apr 1200 1000 200 0 0 20 0 0 $14,800 May 2000 1000 1000 0 0 20 0 0 $34,000 Jun 400 400 0 0 0 8 0 12 $10,000 Jul 400 400 0 0 0 8 0 0 $4,000 Aug 1000 1000 0 0 0 20 12 0 $16,000 Sep 1000 1000 0 0 0 20 0 0 $10,000 Oct 1500 1000 500 0 0 20 0 0 $22,000 Nov 7000 3500 3500 0 0 70 50 0 $144,000 Dec 500 500 250 0 0 10 0 60 $41,000 Total 17000 11800 5450 0 0 $320,800Related Questions
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