Question

a) the total cost of hiring=$ (enter your response as a whole number)

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 February 1,700 June March 1,600 July April 1,800 August 2,300 2,100 1,700 1,700 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 $20 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 $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 Hire (Units) Layoff (Units) Ending Inventory 200 Stockouts (Units) Period Month 0 December 1 January 2 February 3 March 4 April 5 May 6 June 7 July 8 August Demand 1,600 1,200 1,700 1,600 1,800 2,300 2,100 1,700 1,700 Production 1,600 1,600 1,200 1,700 1,600 1,800 2,300 2,100 1,700

b)the total cost of layoffs=$?(enter your response as a whole number)

c)the total inventory carrying cost =$?(enter your response as a whole number)

d)the total stockout cost$?(enter your response as a whole number)

e) the total cost, excluding normal time labor cost, is =$ ?(enter your response as a whole number)

Answer 1

Below is the updated plan and costing based on details given:

Period	Month	Demand	Production	Hire (Units)	Layoff (units)	Ending Inv.	Stockouts (units)
0	December	1,600	1,600	-	0	200	-
1	January	1,200	1,600	-	0	200+1600-1200=600	-
2	February	1,700	1,200	-	1600-1200=400	600+1200-1700=100	-
3	March	1,600	1,700	1700-1200=500	-	100+1700-1600=200	-
4	April	1,800	1,600		1700-1600=100	200+1600-1800=0	-
5	May	2,300	1,800	1800-1600=200	-	-	2300-1800=500
6	June	2,100	2,300	2300-1800=500	-	2300-2100=200
7	July	1,700	2,100		2300-2100=200	200+2100-1700=600
8	August	1,700	1,700	-	2100-1700=400	600	-
Total				1200	1100	2300-200=2100	500
Cost per unit				$55	$75	$20	$125
Total Cost				$66,000	$82,500	$42,000	$62,500
							$253,000

a) the total cost of hiring=$66,000

b)the total cost of layoffs=$82,500

c)the total inventory carrying cost =$42,000

d)the total stockout cost=$62,500

e) the total cost, excluding normal time labor cost, is =$253,000

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