Q1) Evaluate each plan and find out which one is better in terms of total costs - Plan 1: for the manufacturer is to maintain a constant workforce throughout the 6-month period. we assume that the production per day is average requirements ( average production per day) and that we have a constant workforce, no overtime or idle time, no safety stock, and no subcontractors. The firm accumulates inventory during the slack period of demand, January through March, and depletes it during the higher-demand warm season, April through June. We assume beginning inventory = 0 and planned ending inventory = 0. - Plan 2: is to maintain a constant workforce at a level necessary to meet the lowest demand month ( February ) and to meet all demand above this level by subcontracting. Please use the following information : Inventory carrying cost $ 3 per unit per month Subcontracting cost per unit $17 per unit Average pay rate $10 per hour ($80 per day - 8 working hours per day) Labor-hours to produce a unit 4 hours per unit Costs table: Monthly forecasts: Month Expected Demand Production Days Jan 800 16 Feb 600 20 Mar 800 20 Apr 1,250 25 May 1,350 25 Jun 1,500 20
Q1) Evaluate each plan and find out which one is better in terms of total costs
- Plan 1: for the manufacturer is to maintain a constant workforce throughout the 6-month period. we assume that the production per day is average requirements ( average production per day) and that we have a constant workforce, no overtime or idle time, no safety stock, and no subcontractors. The firm accumulates inventory during the slack period of demand, January through March, and depletes it during the higher-demand warm season, April through June. We assume beginning inventory = 0 and planned ending inventory = 0.
- Plan 2: is to maintain a constant workforce at a level necessary to meet the lowest demand month ( February ) and to meet all demand above this level by subcontracting.
Please use the following information :
|
Inventory carrying cost |
$ 3 per unit per month |
|
Subcontracting cost per unit |
$17 per unit |
|
Average pay rate |
$10 per hour ($80 per day - 8 working hours per day) |
|
Labor-hours to produce a unit |
4 hours per unit |
Costs table:
Monthly
|
|
Expected |
Production |
|
Jan |
800 |
16 |
|
Feb |
600 |
20 |
|
Mar |
800 |
20 |
|
Apr |
1,250 |
25 |
|
May |
1,350 |
25 |
|
Jun |
1,500 |
20 |
Step by step
Solved in 2 steps with 2 images
