Question

I only have 1 hour left, please help!!

PP.62 A manufacturer of solid state drives (SSDs) has projected the next six months of demand to be as shown the table below:

Supply/Demand Info	Beginning	Jan	Feb	Mar	Apr	May	Jun
Forecast (demand)		48,000	52,000	60,000	54,000	58,000	64,000
Regular production
Overtime production
Subcontract production
Ending inventory	6,000
Hired employees
Fired employees
Total employees	200

Cost variables as as follows:

Cost Variables
Labor cost/hour	$14
Overtime cost/unit	$32
Subcontracting cost/unit	$29
Holding cost/unit/month	$8
Hiring cost/employee	$2,500
Firing cost/employee	$4,200

Here is some additional relevant (capacity) information:

Capacity Information
Total labor hours/SSD	2
Regular production units/employee/month	200
Max regular production/month	56,000
Max overtime production/month	4,000
Max subcontractor production/month	5,000

Given the above information (and don't overlook beginning number of employees and inventory levels in the first table), create a level production plan with only the use of regular production and no inventory left over at the end of the six-month period.

What is the regular production cost (over the six months from January through June) for a level production plan? (Display your answer to the nearest whole number.)

What is the total overtime production cost for this production plan? (Display your answer to the nearest whole number.)

What is the total subcontract cost for this production plan? (Display your answer to the nearest whole number.)

What is the total holding cost for this production plan? (Display your answer to the nearest whole number.)

What is the total hire cost for this production plan? (Display your answer to the nearest whole number.)

What is the total fire cost for this production plan? (Display your answer to the nearest whole number.)

What is the total cost (sum of all costs) for this production plan? (Display your answer to the nearest whole number.)

Answer 1

The total demand for 6 months is 336000 units. We have 6000 units in hand. This means the net requirement is 330000 units. This results in a monthly requirement of 55000 SSDs.

This means that we need a total of 55000/200 = 275 employees per month. This means we will need to hire 75 employees.The plan is shown below

Supply/Demand Info	Beginning	Jan	Feb	Mar	Apr	May	Jun
Forecast (demand)		48,000	52,000	60,000	54,000	58,000	64,000
Regular production		55000	55000	55000	55000	55000	55000
Overtime production		0	0	0	0	0	0
Subcontract production		0	0	0	0	0	0
Ending inventory	6,000	13,000	16,000	11,000	12,000	9,000	0
Hired employees		75	0	0	0	0	0
Fired employees		0	0	0	0	0	0
Total employees	200	275	275	275	275	275	275

The regular production cost will be 55000*2*6 = 660000

Total overtime cost will be 0

Total subcontract cost will be 0

Total holding cost will be (based on ending inventory) = 61000*8 = 488000

Total hire cost will be = 75*2500 = 187500

Total fire cost will be = 0

Total cost will be = 660000+488000+187500 = 1335500