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Bike Components Inc. manufactures bicycle wheels. The firm's owner/manager, has just received the orders for the next six months: 1,500 1,400 900 1,200 Currently the firm employs 26 full-time workers, each of whom can produce 50 wheels per month at regular output. There is no inventory of finished wheels on hand at present, but the manager would like to have 300 wheels on hand at the end of month 6. The following costs are incurred: Regular: $5.00/unit Overtime: $7.50/unit Inventory: $1.00/unit/month Hiring Cost = $200/worker Overtime Capacity: 20 units/month Develop a level-output plan and calculate its total cost. 1,500 1,700 Subcontracting: $10.00/unit Back order: $6.00/unit/month Subcontracting Capacity: 50 units/month

Bike Components Inc. manufactures bicycle wheels. The firm's owner/manager, has just received the orders for the next six months: 1,500 1,400 900 1,200 Currently the firm employs 26 full-time workers, each of whom can produce 50 wheels per month at regular output. There is no inventory of finished wheels on hand at present, but the manager would like to have 300 wheels on hand at the end of month 6. The following costs are incurred: Regular: $5.00/unit Overtime: $7.50/unit Inventory: $1.00/unit/month Hiring Cost = $200/worker Overtime Capacity: 20 units/month Develop a level-output plan and calculate its total cost. 1,500 1,700 Subcontracting: $10.00/unit Back order: $6.00/unit/month Subcontracting Capacity: 50 units/month

Practical Management Science
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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Bike Components Inc. manufactures bicycle wheels. The firm's owner/manager, has just received the orders for the next six months: 1,500 1,400 1,200 Currently the firm employs 26 full-time workers, each of whom can produce 50 wheels per month at regular output. There is no inventory of finished wheels on hand at present, but the manager would like to have 300 wheels on hand at the end of month 6. The following costs are incurred: Regular: $5.00/unit Overtime: $7.50/unit 900 1,500 1,700 Inventory: $1.00/unit/month Hiring Cost = $200/worker Overtime Capacity: 20 units/month Develop a level-output plan and calculate its total cost. Subcontracting: $10.00/unit Back order: $6.00/unit/month Subcontracting Capacity: 50 units/month
Transcribed Image Text:Bike Components Inc. manufactures bicycle wheels. The firm's owner/manager, has just received the orders for the next six months: 1,500 1,400 1,200 Currently the firm employs 26 full-time workers, each of whom can produce 50 wheels per month at regular output. There is no inventory of finished wheels on hand at present, but the manager would like to have 300 wheels on hand at the end of month 6. The following costs are incurred: Regular: $5.00/unit Overtime: $7.50/unit 900 1,500 1,700 Inventory: $1.00/unit/month Hiring Cost = $200/worker Overtime Capacity: 20 units/month Develop a level-output plan and calculate its total cost. Subcontracting: $10.00/unit Back order: $6.00/unit/month Subcontracting Capacity: 50 units/month
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