Question

Matthew and Mark work for AMG, and want to do some aggregate planning using "Level Production without Backorders" for the manufacturing of brake calipers for Mercedes Benz S63 sedans. They figure the front brake calipers take 9 hours to forge and assemble while the rear calipers take 7 hours to forge and assemble. They pay their people $24.00 per hour and it costs them $900.00 to hire and $1,300 to fire each employee. They currently employ 6 people and have 129 front calipers in inventory and 113 rear calipers in inventory. Inventory carrying costs are $7.00 per labor hour. Assume 40 hours per week and 4 weeks per month. Please disregard rounding errors and select the closest answer.

The following is the 6 month demand forecast in units:

Month	1	2	3	4	5	6
Front Calipers	200	750	330	550	240	180
Rear Calipers	230	730	340	500	250	220

You will need to first figure what the level production amount will be using the following information over 6 periods:

                                                  1                2                  3                  4                 5                    6       

Cumulative Demand

Beginning Inventory (Constant using the inventory levels given)

Total Cumulative Production

Monthly Production

Use the following model to construct your analysis:

                               1              2                  3                 4               5                  6

Beginning Inventory

Demand

Production

Ending Inventory

Hire Costs

Fire Costs

Wage Costs

Inventory Costs

Total Costs

1. What is the cumulative demand for all periods in labor hours?

A. 28,970

B. 36,140

C. 27,080

D. 29,350

2. What is the level production amount in labor hours?

A. 5,089

B. 4,667

C. 5,511

D. 6,780

3. How many employees will they need to hire (or fire)?

A. Hire 37

B. Hire 32

C. Hire 26

D. Fire 2

4. What is the hiring (or firing) cost in Period 1?

A. $21,600

B. $33,300

C. $23,400

D. $26,100

5. What is the total cost for implementing this plan?

A. $917,672

B. $760,599

C. $1,125,689

D. $777,862

Please show the work.

Answer 1

Q.1 - Ans B Workings as follows

Cumulative labor Hours for Front Caliper
Month	1	2	3	4	5	6
Hours	9	9	9	9	9	9
Demand in Units	200	750	330	550	240	180
Demand in labor Hours	1800	6750	2970	4950	2160	1620
Cumulative labor Hours(A)		8550	11520	16470	18630	20250
Cumulative labor Hours for Rear Caliper
Month	1	2	3	4	5	6
Hours	7	7	7	7	7	7
Demand in Units	230	730	340	500	250	220
Demand in labor Hours	1610	5110	2380	3500	1750	1540
Cumulative labor Hours(B)		6720	9100	12600	14350	15890
Cumulative Demand for all periods in labor hours=(A)+(B)						36140