Q2) 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 $??????

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...

See similar textbooks

Related questions

Question

From Chapter 13: Aggregate Plan

Q2) 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	$??????

Expert Solution

Step 1

In chase plan, the output is just equal to the requirements. Hence the ending inventory is usually zero. In certain cases, the endind inventory might be a bit high.

Chase plan means chasing the demand and thus no backorders or ending inventory.

Trending now

This is a popular solution!

Step by step

Solved in 2 steps with 6 images

SEE SOLUTION Check out a sample Q&A here

Follow-up Questions

Read through expert solutions to related follow-up questions below.

Follow-up Question

Q2) 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