Mama\'s Stuffin\' is a popular food item during the fall and winter months, but
ID: 465737 • Letter: M
Question
Mama's Stuffin' is a popular food item during the fall and winter months, but it is marginal in the spring and summer. Use the following demand forecasts and costs to determine which of the following production planning strategies is best for Mama's Stuffin':
a. Level production over the 12 months.
b. Produce to meet demand each month. Absorb variations in demand by changing the size of the workforce.
c. Keep the workforce at its current level. Supplement with overtime and subcontracting as necessary.
Month
Demand Forecast
March
2000
April
1000
May
1000
June
1000
July
1000
August
1500
September
2500
October
3000
November
9000
December
7000
January
4000
February
3000
Overtime capacity per month
Regular production
Subcontracting capacity per month
Unlimited
Regular production cost
$30 per pallet
Overtime production cost
$40 per pallet
Subcontracting cost
$50 per pallet
Holding cost
$2 per pallet
Beginning workforce
10 workers
Production rate
200 pallets per worker per month
Hiring cost
$5000 per worker
Firing cost
$8000 per worker
Month
Demand Forecast
March
2000
April
1000
May
1000
June
1000
July
1000
August
1500
September
2500
October
3000
November
9000
December
7000
January
4000
February
3000
Explanation / Answer
The best option is the third one as it gives the lowest cost.
Level Production Month Demand Production Workers Inventory Costs Capacity Actual Opening Closing Holding Production Overtime Total March 2000 2000 3000 10 0 1000 2000 60000 40000 102000 April 1000 2000 3000 10 1000 3000 6000 60000 40000 106000 May 1000 2000 3000 10 3000 5000 10000 60000 40000 110000 June 1000 2000 3000 10 5000 7000 14000 60000 40000 114000 July 1000 2000 3000 10 7000 9000 18000 60000 40000 118000 August 1500 2000 3000 10 9000 10500 21000 60000 40000 121000 September 2500 2000 3000 10 10500 11000 22000 60000 40000 122000 October 3000 2000 3000 10 11000 11000 22000 60000 40000 122000 November 9000 2000 3000 10 11000 5000 10000 60000 40000 110000 December 7000 2000 3000 10 5000 1000 2000 60000 40000 102000 January 4000 2000 3000 10 1000 0 0 60000 40000 100000 February 3000 2000 3000 10 0 0 0 60000 40000 100000 Total Cost 127000 720000 480000 1327000Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.