Answered: The president of Hill Enterprises,…

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...

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Question

The president of Hill Enterprises, Terri Hill, projects
the firm’s aggregate demand requirements over the next 8 months
as follows:
Jan. 1,400 May 2,200
Feb. 1,600 June 2,200
Mar. 1,800 July 1,800
Apr. 1,800 Aug. 1,800

Her operations manager is considering a new plan, which
begins in January with 200 units on hand. Stockout cost of lost
sales is $100 per unit. Inventory holding cost is $20 per unit per
month. Ignore any idle-time costs. The plan is called plan A.
Plan A: Vary the workforce level to execute a strategy that
produces the quantity demanded in the prior month. The
December demand and rate of production are both 1,600 units
per month. The cost of hiring additional workers is $5,000 per
100 units. The cost of laying off workers is $7,500 per 100 units.
Evaluate this plan.

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