Expected Production Month Demand Days Jan 800 30 Feb 1.000 28 Average pay rate Mar 1.200 30 Apr 1.500 29 Overtime pay rate May 2.000 30 Jun 1.600 29 Jul 1.400 30 Cost Information Inventory carrying cost Subcontracting cost per unit Labor-hours to produce a unit $5 per unit per month $10 per unit $5 per hour ($40 per day) $7 per hour (above 8 hours per day) 1.6 hours per unit Cost of increasing daily production rate (hiring $300 per unit Aug 1.500 30 and training) Sep 1.600 29 Cost of decreasing daily production rate $600 per unit Oct 1.700 30 (layoffs) Nov 1.400 29 Dec 1.900 28
Expected Production Month Demand Days Jan 800 30 Feb 1.000 28 Average pay rate Mar 1.200 30 Apr 1.500 29 Overtime pay rate May 2.000 30 Jun 1.600 29 Jul 1.400 30 Cost Information Inventory carrying cost Subcontracting cost per unit Labor-hours to produce a unit $5 per unit per month $10 per unit $5 per hour ($40 per day) $7 per hour (above 8 hours per day) 1.6 hours per unit Cost of increasing daily production rate (hiring $300 per unit Aug 1.500 30 and training) Sep 1.600 29 Cost of decreasing daily production rate $600 per unit Oct 1.700 30 (layoffs) Nov 1.400 29 Dec 1.900 28
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...
Related questions
Question
A company plans its production needs and the number of production days as shown in the table below:
| Month | Expected Demand | Production Days |
| Jan | 800 | 30 |
| Feb | 1000 | 28 |
| Mar | 1200 | 30 |
| Apr | 1500 | 29 |
| May | 2000 | 30 |
| Jun | 1600 | 29 |
| Jul | 1400 | 30 |
| Aug | 1500 | 30 |
| Sep | 1600 | 29 |
| Oct | 1700 | 30 |
| Nov | 1400 | 29 |
| Dec | 1900 | 28 |
Calculate the total cost incurred when using aggregate planning:
a. Level Strategy
b. Mix Strategy
c. Chase Strategy
Tabulate the results and explain which one should be chosen!
Transcribed Image Text:Expected
Production
Month
Demand
Days
Jan
800
30
Feb
1.000
28
Average pay rate
Mar
1.200
30
Apr
1.500
29
Overtime pay rate
May
2.000
30
Jun
1.600
29
Jul
1.400
30
Cost Information
Inventory carrying cost
Subcontracting cost per unit
Labor-hours to produce a unit
$5 per unit per month
$10 per unit
$5 per hour ($40 per day)
$7 per hour
(above 8 hours per day)
1.6 hours per unit
Cost of increasing daily production rate (hiring $300 per unit
Aug
1.500
30
and training)
Sep
1.600
29
Cost of decreasing daily production rate
$600 per unit
Oct
1.700
30
(layoffs)
Nov
1.400
29
Dec
1.900
28
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