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Magazine Chapter 4: Q7OQ. (page 507)
Develop a production plan and calculate the annual cost for a firm whose demand forecast is fall, 10,000; winter, 8,000; spring, 7,000; summer, 12,000. Inventory at the beginning of fall is 500 units. At the beginning of fall, you currently have 30 workers, but you plan to hire temporary workers at the beginning of summer and lay them off at the end of summer. In addition, you have negotiated with the union an option to use the regular workforce on overtime during winter or spring if overtime is necessary to prevent stock-outs at the end of those quarters. Overtime is not available during the fall. Relevant costs are hiring, \(100 for each temp; layoff, \)200 for each worker laid off; inventory holding, \(5 per unit-quarter; backorder, \)10 per unit; straight time, \(5 per hour; over time, \)8 per hour. Assume that the productivity is 0.5 units per worker hour, with eight hours per day and 60 days per season.
Short Answer
It is reasoned that the complete creation cost of the arrangement is $376,800.
Step by step solution
Prepare the production plan of the company as shown below-
Work out the time taken for the development of one unit as displayed underneath:
Usefulness = 0.5 unit each hour
= 2 hours for every unit
The expense of creating every unit is determined during the straight time and during extra time, as displayed underneath:
Straight time work cost = $5 each hour
Usefulness = 2 hours for each unit
In this manner,
Straight time unit cost = Straight Time Labor Cost x Productivity
= $5 x 2 hours/unit
=$10 for each unit
Additional minutes time work cost $8 each hour
Usefulness = 2 hours for each unit
Over the long haul unit cost = Over time work cost x Productivity
= $8 脳 2 hours/unit
= $16 for every unit
Now, calculate the number of units produced by each worker as shown below:
Number of units produced per worker per season = 0.5脳8脳60
The production plan is expected to fulfill the need displayed beneath-
The quantity of laborers in the first place is given to be 30.
The equations utilized in the cells are given beneath:
Straight time creation = Number of laborers x 240 units/specialist
Cost of straight time creation = straight time creation x 10
Additional time creation = Demand gauge - straight time creation - starting inventory
Cost of over the long haul creation = over the long haul creation x 16
Rainchecks = Demand gauge - straight time creation - Additional time creation - starting inventory
Laborers recruited = required specialists - available specialists
Laborers terminated = available specialists - required specialists
Recruiting cost = laborers hired脳100
Terminating cost laborers terminated x 200
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