The president of Hill Enterprises, Terri Hill, projects the firm's aggregate demand requirements over the next 8 months as follows:
January |
1,200 |
May |
2,300 |
February |
1,600 |
June |
2,200 |
March |
1,800 |
July |
1,800 |
April |
1,700 |
August |
1,800 |
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
$100 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
$55per unit. The cost of laying off workers is
$75 per unit. Evaluate this plan.
(Enter
all responses as whole
numbers.)
Note: Both hiring and layoff costs are incurred in the month of the change. For example, going from
1,600
in January to
1,200
in February incurs a cost of layoff for
400
units in February.
Period |
Month |
Demand |
Production |
Hire (Units) |
Layoff (Units) |
Ending Inventory |
Stockouts (Units) |
0 |
December |
1,600 |
1,600 |
x | x |
200 |
x |
1 |
January |
1,200 |
1,600 |
x |
x |
x |
x |
2 |
February |
1,600 |
1,200 |
x |
x |
x |
x |
3 |
March |
1,800 |
1,600 |
x |
x |
x |
x |
4 |
April |
1,700 |
1,800 |
x |
x |
x |
x |
5 |
May |
2,300 |
1,700 |
x |
x |
x |
x |
6 |
June |
2,200 |
2,300 |
x |
x |
x |
x |
7 |
July |
1,800 |
2,200 |
x |
x |
x |
x |
8 |
August |
1,800 |
1,800 |
x |
x |
x |
x |
Enter your answer in the edit fields and then click Check Answer. (solve for all x's)
total overtime production cost?
total inventory holding cost for january through august?
total stockout cost?
the total cost, excluding normal time labor costs?
Period | Month | Demand | Production | Hire Units | Layoff Units | Ending Inventory | Stock Outs |
0 | December | 1600 | 1600 | 0 | 0 | 200 | 0 |
1 | January | 1200 | 1600 | 0 | 0 | 600 | 0 |
2 | February | 1600 | 1200 | 0 | 400 | 200 | 0 |
3 | March | 1800 | 1600 | 400 | 0 | 0 | 0 |
4 | April | 1700 | 1800 | 200 | 0 | 100 | 0 |
5 | May | 2300 | 1700 | 0 | 100 | 0 | 500 |
6 | June | 2200 | 2300 | 600 | 0 | 0 | 400 |
7 | July | 1800 | 2200 | 0 | 100 | 0 | 0 |
8 | August | 1800 | 1800 | 0 | 400 | 0 | 0 |
Total Overtime Production Cost = $ 66,000
Total Inventory Holding Cost from Jan-Aug = $ 22,500
Total Stock Out Cost = $ 90,000
The president of Hill Enterprises, Terri Hill, projects the firm's aggregate demand requirements over the next...
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