A new start-up company is conducting a SOP meeting in order to "plan ahead" to effectively address the seasonal variation appearing in the annual demand of its products. Pedro, the planning manager is considering to use a planning horizon of 6 months and utilize the following information: Demand Forecast No. of Working Days Month January 1,800 22 February 1,500 19 March 1,100 21 April 900 21 May 1,100 22 June 1,600 20 Cost Breakdown Cost (Php) Material 100 per unit Inventory Holding 5 per unit per month Marginal Stock-out 10 per unit per month Marginal Cost of Subcontracting* Hiring and Training 20 per unit 1,000 per worker Layoff 1,500 per worker Regular Labor Cost per Hour 15 per worker per hour 20 per worker per hour Overtime Labor Cost per Hour *Cost of buying less material costs Starting and Operating Conditions Current Inventory 400 units 38 workers Current Workforce Labor Hours per Unit 5 worker-hours/ unit Regular Labor Time per Employee per Day 8 hours Inventory at the End of Each Month 25% of corresponding demand a. Compute the production net requirements b. Determine the production cost of producing exactly the quantities required for each period through regular labor by varying the workforce. Use the table below for your final solution/answer. Cost Item

Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
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A new start-up company is conducting a SOP meeting in order to "plan ahead" to effectively address the seasonal variation
appearing in the annual demand of its products. Pedro, the planning manager is considering to use a planning horizon of 6 months
and utilize the following information:
Demand Forecast
No. of Working Days
Month
January
1,800
22
February
1,500
19
March
1,100
21
April
900
21
May
1,100
22
June
1,600
20
Cost Breakdown
Cost (Php)
Material
100 per unit
Inventory Holding
5 per unit per month
Marginal Stock-out
10 per unit per month
Marginal Cost of Subcontracting*
20 per unit
1,000 per worker
Hiring and Training
Layoff
1,500 per worker
Regular Labor Cost per Hour
Overtime Labor Cost per Hour
*Cost of buying less material costs
15 per worker per hour
20 per worker per hour
Starting and Operating Conditions
Current Inventory
400 units
Current Workforce
38 workers
Labor Hours per Unit
5 worker-hours / unit
Regular Labor Time per Employee per Day
8 hours
Inventory at the End of Each Month
25% of corresponding demand
a. Compute the production net requirements
b. Determine the production cost of producing exactly the quantities required for each period through regular labor by varying the
workforce. Use the table below for your final solution/answer.
Cost Item
Transcribed Image Text:A new start-up company is conducting a SOP meeting in order to "plan ahead" to effectively address the seasonal variation appearing in the annual demand of its products. Pedro, the planning manager is considering to use a planning horizon of 6 months and utilize the following information: Demand Forecast No. of Working Days Month January 1,800 22 February 1,500 19 March 1,100 21 April 900 21 May 1,100 22 June 1,600 20 Cost Breakdown Cost (Php) Material 100 per unit Inventory Holding 5 per unit per month Marginal Stock-out 10 per unit per month Marginal Cost of Subcontracting* 20 per unit 1,000 per worker Hiring and Training Layoff 1,500 per worker Regular Labor Cost per Hour Overtime Labor Cost per Hour *Cost of buying less material costs 15 per worker per hour 20 per worker per hour Starting and Operating Conditions Current Inventory 400 units Current Workforce 38 workers Labor Hours per Unit 5 worker-hours / unit Regular Labor Time per Employee per Day 8 hours Inventory at the End of Each Month 25% of corresponding demand a. Compute the production net requirements b. Determine the production cost of producing exactly the quantities required for each period through regular labor by varying the workforce. Use the table below for your final solution/answer. Cost Item
Month
January
February
March
April
May
June
Production Required Work
Requirement Labor Days
Hours
Material Labor
Costs
Costs
Hiring Firing
Cost
Cost
Total
Cost
Transcribed Image Text:Month January February March April May June Production Required Work Requirement Labor Days Hours Material Labor Costs Costs Hiring Firing Cost Cost Total Cost
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