Question

The president of Hill Enterprises, Terri Hil, prajects the firm's aggregate demand requirements over the next 8 months as folows 200 1,600 1,700 1,700 May January February March Apri 2,100 1,900 1,900 July ust Her operations manager is considering a new plan, which begins in January with 200 units of inventory on hand. Stockout cost of lost sales is $125 per unit. Inventory holding cost is $25 per unit per month. Ignore any idle-time costs The plan is called plan A. Plan A: Vary the workforce level to execute a strategy that produces the quantity demanded in the prior month. The December demand and rate of production are both 1,600 units per month. The cost of hiring additional workers is $55 per unit. The cost of laying off workers is Note Both hining and layoff casts are incurred in the month of the changs. For erample, going from 1,600 in January to 1,200 in February ncurs a cost of layoff for 400 units n Fsbruary Hire Layoff Period Month Demand Production In 1,600 1January 1200 2 February 1600 1,700 1,700 2.200 2.100 1,900 1,900 1,600 1,600 1,200 1,600 1,700 1,700 2200 2,100 1,900 200 3 March 4 April 5 May 6 June 7 July 8 August The total coest of hiringsEter your response as a whole The total cost of layoffs (Enfer your response as a whove number) The total inventory carrying cost-S| |.(Enter your response 83 whole numoer) The total stockout cost Enter your response as a whole number) The total cost, excluding normal ime labor costs, is (Enter your response ss s whoie number) as a whole number)

Answer 1

Please find below the response.

Ending inventory of the month = Ending inventory of previous month + Production - Demand, If the value is negative it means there is a stockout and ending inv is zero and there is a stockout.

							Cost
Month	Demand	Production	Ending inventory	Stockout	Hired units	Layoff units	Inventory cost= 25*Ending inventory	Stockout cost=125*Stockout	Hiring cost = 55* Hired units	Firing cost = 75* Layoff units
December	1,600	1,600	200
January	1,200	1,600	600	0	0	0	$                      15,000.00	0	0	0
February	1,600	1,200	200	0	0	400	$                        5,000.00	0	0	$          30,000.00
March	1,700	1,600	100	0	400	0	$                        2,500.00	0	$         22,000.00	0
April	1,700	1,700	100	0	100	0	2500.00	0	$           5,500.00	0
May	2,200	1,700	0	400	0	0	0.00	$      50,000.00	0	0
June	2,100	2,200	100	0	500	0	2500.00	0	$         27,500.00	0
July	1,900	2,100	300	0	0	100	$                        7,500.00	0	0	$ 7500
August	1,900	1,900	300	0	0	200	$                        7,500.00	0	0	$          15,000.00
	14,300					Total	$                      42,500.00	$      50,000.00	$         55,000.00	$          52,500.00	$   200,000.00

Total hiring cost	$      55,000.00
Total layoff cost	$      52,500.00
Total inventory	$      42,500.00
Total stockout cost	$      50,000.00
Total cost Excluding labor	$   200,000.00