You manage a consulting firm down the street from Consuelo Chua, Inc., and to ge

ID: 467913 • Letter: Y

Question

You manage a consulting firm down the street from Consuelo Chua, Inc., and to get your foot in the door, you have told Mr. Chua that you can do a better job at aggregate planning than his current staff. He said, "Fine. You do that, and you have a 1-year contract." To make good on your boast, you propose a new strategy. Hire 5 workers in August and 5 more in October, and subcontract to meet the rest of the demand. What will be the cost of this strategy? CostS Holding cost Subcontracting Regular-time labor Overtime labor Hiring cost Layoff cost $9/disk drive/Month $80/disk drive $12 $18/hour (above 8 hours) $40/worker $80/worker Other data Current workforce (June) 8 people Labor-hours/disk drive 4 hours Workdays/month Beginning Inventory Ending inventorv *Note that there is no holding cost for June. 20 days 150 disk drives* 0 disk drives Fill in the table below. (Enter all responses as whole numbers. In the hire/fire column, use positive numbers for hires -- plus signs omitted; negative numbers for layoffs.) Beginning Inventory 150 Units Produced Personnel onHire / Ending Month Demand Staff Layoff Inventory 0 June 1 July 2 August 3 September 4 October 5 November 6 December 350 450 550 650 800 720 Enter your answer in the edit fields and then click Check Answer.

Explanation / Answer

With ref. to information given in table , I have made calculation in following table .

Assumption :

1) Company has 8 hours working

2) No overtime required

3) No Lay off required as , lay off cost is more

Solution

Hiring cost = $ 400

Total Inventory carrying Cost = $ 33030

Total cost excluding normal labor cost = $ 33430

Demand Beginning Inventory 20 Workdays / month Time in hours Units Produced Staff Staff Cost $ 12 / hour Hire cost Lay Off Ending Inventory Inventory cost $ 9 /disk June 150 20 4 8 15360 150 1350 July 350 20 4 640 8 15360 440 3960 August 450 20 4 640 13 24960 200 630 5670 September 550 20 4 640 13 24960 720 6480 October 650 20 4 640 18 34560 200 710 6390 November 800 20 4 640 18 34560 550 4950 December 720 20 4 640 18 34560 470 4230 3520 20 3840 184320 400 470 33030

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You manage a consulting firm down the street from Consuelo Chua, Inc., and to ge

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