A company blends and bottles an energy drink in various flavors for college students. The aggregate forecast for the next four quarters (1 year) in thousands of gallons is as follows: Quarter Demand forecast per 1000 gallons 1 400 2 700 3 850 4 650 Each employee works 550 standard straight-time hours each quarter. On average, it takes 27 hours to produce and package 1 unit (1,000 gallons). Straight-time labor costs $6.00/hour; overtime labor costs $9.00/hour. Inventory holding cost is approximately $4.50/unit (1,000 gallons) per quarter, based on ending inventory per quarter. Due to the extremely hot weather, there is no initial inventory on hand to start the first quarter. Management wants a constant workforce (no hiring and no layoffs). Managers have also decided to always round the number of employees needed to the next integer, i.e., 37.2 yields 38 employees. Using a level strategy program, what will the annual labor cost be if only 30 employees are available and overtime is used?
A company blends and bottles an energy drink in various flavors for college students. The aggregate
Quarter
Demand forecast per 1000 gallons
1 400
2 700
3 850
4 650
Each employee works 550 standard straight-time hours each quarter.
On average, it takes 27 hours to produce and package 1 unit (1,000 gallons).
Straight-time labor costs $6.00/hour; overtime labor costs $9.00/hour.
Inventory holding cost is approximately $4.50/unit (1,000 gallons) per quarter, based on ending inventory per quarter.
Due to the extremely hot weather, there is no initial inventory on hand to start the first quarter.
Management wants a constant workforce (no hiring and no layoffs).
Managers have also decided to always round the number of employees needed to the next integer, i.e., 37.2 yields 38 employees.
Using a level strategy program, what will the annual labor cost be if only 30 employees are available and overtime is used?
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