Develop a production plan and calculate the annual cost for a firm whose demand
ID: 443484 • Letter: D
Question
Develop a production plan and calculate the annual cost for a firm whose demand forecast is fall, 9,700; winter, 8,000; spring, 7,000; summer, 11,700. Inventory at the beginning of fall is 485 units. At the beginning of fall you currently have 35 workers, but you plan to hire temporary workers at the beginning of summer and lay them off at the end of summer. In addition, you have negotiated with the union an option to use the regular workforce on overtime during winter or spring only if overtime is necessary to prevent stockouts at the end of those quarters. Overtime is not available during the fall. Relevant costs are hiring, $80 for each temp; layoff, $160 for each worker laid off; inventory holding, $5 per unit-quarter; backorder, $10 per unit; straight time, $5 per hour; overtime, $8 per hour. Assume that the productivity is 0.5 unit per worker hour, with eight hours per day and 60 days per season. (Round up number of workers to the next whole number and the rest of your values to the nearest whole number. Negative values should be indicated by a minus sign. Leave no cells blank - be certain to enter "0" wherever required.)
Develop a production plan and calculate the annual cost for a firm whose demand forecast is fall, 9,700; winter, 8,000; spring, 7,000; summer, 11,700. Inventory at the beginning of fall is 485 units. At the beginning of fall you currently have 35 workers, but you plan to hire temporary workers at the beginning of summer and lay them off at the end of summer. In addition, you have negotiated with the union an option to use the regular workforce on overtime during winter or spring only if overtime is necessary to prevent stockouts at the end of those quarters. Overtime is not available during the fall. Relevant costs are hiring, $80 for each temp; layoff, $160 for each worker laid off; inventory holding, $5 per unit-quarter; backorder, $10 per unit; straight time, $5 per hour; overtime, $8 per hour. Assume that the productivity is 0.5 unit per worker hour, with eight hours per day and 60 days per season. (Round up number of workers to the next whole number and the rest of your values to the nearest whole number. Negative values should be indicated by a minus sign. Leave no cells blank - be certain to enter "0" wherever required.)
Explanation / Answer
Fall Winter Spring Summer Forecast 9,700 8,000 7,000 11,700 Beginning Inventory 485 -815 0 1,400 Production Required 9,215 8,815 7,000 10,300 Production Hour required 18430 17630 14,000 20,600 Production Hour Available 16,800 16,800 16,800 16,800 Overtime Hours 0 830 0 3,800 Temp Worker 0 0 0 8 Total Hour Available 16,800 17,630 16,800 20,600 Actual Production 8,400 8,815 8,400 10,300 Ending Inventory -815 0 1,400 0 Workers Hired 0 0 0 8 Workers Laid Off 0 0 0 8 Straight Time $84,000.00 $84,000.00 $84,000.00 $84,000.00 Over time $0.00 $6,640.00 $0.00 $0.00 Inventory $2,425.00 $0.00 $0.00 $7,000.00 Backorder $0.00 $8,150.00 $0.00 $0.00 Hiring $0.00 $0.00 $0.00 $640.00 Layoff $0.00 $0.00 $0.00 $1,280.00 Total $86,425.00 $98,790.00 $84,000.00 $92,920.00 Annual Cost $362,135.00
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