Holding cost = $7 per unit per month Subcontracting cost = $65 per unit Regular time labor cost = $15 per hour. Each worker works 8 hours per day as regular time laborers Overtime labor cost = $19 per hour for hours above 8 hours per worker per day Hiring cost = $40 per worker Firing cost = $80 per worker Demand during the month of June = 640 units Labor hours per unit = 3 Beginning inventory in July = 150 units Please follow the outlined strategy accurately. The strategy is to fulfill the gross demand in each month, storing any excess units in a warehouse as inventory. The warehouse can only hold 300 units maximum, so any additional units that cannot be warehoused will have to be scrapped and sent to a recycler at a cost of $50 a unit. The recycler will dispose of the units in an environmentally friendly manner. The workers employed during a month, working 8 hours a day as regular time labor, produce exactly the gross demand in the previous month. For example, the regular time labor would produce 720 units (gross demand during August) during the month of September. In case the units produced by regular production and the amount in inventory cannot fulfill the gross demand in any month, the demand is met by subcontracting to a maximum of 20% of the gross demand (NOT net demand) for that month. For example, for the month of October, if necessary, to fulfill demand by subcontracting, the maximum amount allowed for subcontracting will be 20% of 1,040 which is 208 units. Any remaining demand is met using overtime labor. Assume that the month of July begins with all new workers being hired.
Holding cost = $7 per unit per month
Subcontracting cost = $65 per unit
Regular time labor cost = $15 per hour. Each worker works 8 hours per day as regular time laborers
Overtime labor cost = $19 per hour for hours above 8 hours per worker per day
Hiring cost = $40 per worker
Firing cost = $80 per worker
Demand during the month of June = 640 units
Labor hours per unit = 3
Beginning inventory in July = 150 units
Please follow the outlined strategy accurately. The strategy is to fulfill the gross demand in each month, storing any excess units in a warehouse as inventory. The warehouse can only hold 300 units maximum, so any additional units that cannot be warehoused will have to be scrapped and sent to a recycler at a cost of $50 a unit. The recycler will dispose of the units in an environmentally friendly manner. The workers employed during a month, working 8 hours a day as regular time labor, produce exactly the gross demand in the previous month. For example, the regular time labor would produce 720 units (gross demand during August) during the month of September. In case the units produced by regular production and the amount in inventory cannot fulfill the gross demand in any month, the demand is met by subcontracting to a maximum of 20% of the gross demand (NOT net demand) for that month. For example, for the month of October, if necessary, to fulfill demand by subcontracting, the maximum amount allowed for subcontracting will be 20% of 1,040 which is 208 units. Any remaining demand is met using overtime labor. Assume that the month of July begins with all new workers being hired.
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