Question

Hotlines Aire (HA), located outside Atlanta, produces electrical generators for several domestic commercial aircraft manufacturers. One of the processes to build a generator involves assembling a wire coil assembly. Roger Bingham, the production planner is currently planning the production needs for the next 5 weeks.

HA has 20 production employees that work on the wire coil assembly process. The productive time for each employee is 8 hours each day (straight time). At Roger's discretion, employees can be required to work overtime each week. However, HA restricts the amount of overtime to15% of straight time. The average straight-time labor rate is $50 per hour, the overtime rate is time and a half. Each worker can produce 2.0 coil assemblies per hour.

To help in its planning efforts, HA maintains an inventory holding cost of $5.45 per unit in storage. Depending on the production levels required to match supply with demand, HA has consistently budgeted $1,500.00 to hire a new employee and $3,200.00 to terminate or layoff an employee.

HA has determined the demand for the next 5 weeks as follows:

Week 1	Week 2	Week 3	Week 4	Week 5	Total
1680	1600	1520	1760	1840	8400

What is the total cost of a pure level strategy plan?

	462,170
	329,682

	198,079
	220,929

230,713

Answer 1

Level plan is following:

Total cost of a pure level strategy plan = $ 214,116