Eagle Fabrication has the following aggregate demand requirements and other data for the upcoming four quarters. Quarter Demand Previous quarter's output 1500 units 1 1400 Beginning inventory 200 units 2 1000 Stockout cost $50 per unit 3 1500 Inventory holding cost $8 per unit at end of quarter 4 1300 Hiring workers $5 per unit Laying off workers $10 per unit Unit cost $30 per unit Overtime $10 extra per unit Which of the following production plans is better: Plan A—chase demand by hiring and layoffs; or Plan B—produce at a constant rate of 1200 and obtain the remainder from overtime? Finish the calculation. Plan A: Eagle Fabrication Solution Demand Regular Time Capacity Regular Time Production Hire Fire Initial Inventory Period 1 1,400 1200 Period 2 1,000 Period 3 1,500 Period 4 1,300 Total (units) 5,200 @$30/unit @$5/unit @$10/unit Subtotal Costs $?????? $???? $???? Total Cost $?????? Plan B: Eagle Fabrication Solution Demand Regular Time Capacity Overtime Capacity Regular Time Production Overtime Production Inventory (end PD) Fire Initial Inventory 200. Period 1 1,400 1,200 Period 2 1,000 Period 3 1,500 Period 4 1,300 Total (units) 5,200 @$30/unit @$30+@$10 = @$40/unit @$8/unit @$10/unit Subtotal Costs $?????? $???? $???? $???? Total Cost $??????
Eagle Fabrication has the following aggregate demand requirements and other data for the upcoming four quarters.
|
Quarter |
Demand |
Previous quarter's output |
1500 units |
|
1 |
1400 |
Beginning inventory |
200 units |
|
2 |
1000 |
Stockout cost |
$50 per unit |
|
3 |
1500 |
Inventory holding cost |
$8 per unit at end of quarter |
|
4 |
1300 |
Hiring workers |
$5 per unit |
|
|
|
Laying off workers |
$10 per unit |
|
|
|
Unit cost |
$30 per unit |
|
|
|
Overtime |
$10 extra per unit |
Which of the following production plans is better: Plan A—chase demand by hiring and layoffs; or
Plan B—produce at a constant rate of 1200 and obtain the remainder from overtime?
Finish the calculation.
Plan A:
Eagle Fabrication Solution
|
|
Demand |
Regular Time Capacity |
Regular Time Production |
Hire |
Fire |
|
Initial Inventory |
|
|
|
|
|
|
Period 1 |
1,400 |
1200 |
|
|
|
|
Period 2 |
1,000 |
|
|
|
|
|
Period 3 |
1,500 |
|
|
|
|
|
Period 4 |
1,300 |
|
|
|
|
|
Total (units) |
5,200 |
|
|
|
|
|
|
|
|
@$30/unit |
@$5/unit |
@$10/unit |
|
Subtotal Costs |
|
|
$?????? |
$???? |
$???? |
|
Total Cost |
$?????? |
|
|
|
|
Plan B:
Eagle Fabrication Solution
|
|
Demand |
Regular Time Capacity |
Overtime Capacity |
Regular Time Production |
Overtime Production |
Inventory (end PD) |
Fire |
|
Initial Inventory |
|
|
|
|
|
200. |
|
|
Period 1 |
1,400 |
1,200 |
|
|
|
|
|
|
Period 2 |
1,000 |
|
|
|
|
|
|
|
Period 3 |
1,500 |
|
|
|
|
|
|
|
Period 4 |
1,300 |
|
|
|
|
|
|
|
Total (units) |
5,200 |
|
|
|
|
|
|
|
|
|
|
|
@$30/unit |
@$30+@$10 = @$40/unit |
@$8/unit |
@$10/unit |
|
Subtotal Costs |
|
|
|
$?????? |
$???? |
$???? |
$???? |
|
Total Cost |
$?????? |
|
|
|
|
|
|
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