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Business
Operations Management
The total cost, excluding normal time labor costs, for Plan A = $. (Enter your response as a whole number.) Plan B: Vary the workforce to produce the prior month's demand. Demand was 1,300 units in June. The cost of hiring additional workers is $30 per unit produced. The cost of layoffs is $65 per unit cut back. (Enter all responses as whole numbers.) Note: Both hiring and layoff costs are incurred in the month of the change (i.e., going from production of 1,300 in July to 1000 in August requires a layoff (and related costs) of 300 units in August). Month 1 July 2 August 3 September 4 October 5 November 6 December Demand 1000 1200 1400 1800 1800 1800 Hire Production (Units) The total hiring cost = $ (Enter your response as a whole number.) The total layoff cost = $. (Enter your response as a whole number.) The total inventory carrying cost = $ The total stockout cost = $. (Enter your response as a whole number.) The total cost, excluding normal time labor costs, for Plan B = $ Layoff (Units) (Enter your response as a whole number.) Ending Stockouts Inventory (Units) (Enter your response as a whole number.)

The total cost, excluding normal time labor costs, for Plan A = $. (Enter your response as a whole number.) Plan B: Vary the workforce to produce the prior month's demand. Demand was 1,300 units in June. The cost of hiring additional workers is $30 per unit produced. The cost of layoffs is $65 per unit cut back. (Enter all responses as whole numbers.) Note: Both hiring and layoff costs are incurred in the month of the change (i.e., going from production of 1,300 in July to 1000 in August requires a layoff (and related costs) of 300 units in August). Month 1 July 2 August 3 September 4 October 5 November 6 December Demand 1000 1200 1400 1800 1800 1800 Hire Production (Units) The total hiring cost = $ (Enter your response as a whole number.) The total layoff cost = $. (Enter your response as a whole number.) The total inventory carrying cost = $ The total stockout cost = $. (Enter your response as a whole number.) The total cost, excluding normal time labor costs, for Plan B = $ Layoff (Units) (Enter your response as a whole number.) Ending Stockouts Inventory (Units) (Enter your response as a whole number.)

Practical Management Science
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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**Plan B Cost Analysis for Workforce and Production Demand** This exercise focuses on calculating various costs involved in adjusting workforce levels to meet production demands outlined for each month. These costs involve hiring, layoffs, inventory carrying, and stockouts. The overall objective is to determine the total cost for Plan B, excluding normal time labor costs. ### Monthly Demand and Production Table | Month | Demand | Production | Hire (Units) | Layoff (Units) | Ending Inventory | Stockouts (Units) | |------------|--------|------------|--------------|---------------|------------------|-------------------| | 1. July | 1000 | | | | | | | 2. August | 1200 | | | | | | | 3. September| 1400 | | | | | | | 4. October | 1800 | | | | | | | 5. November| 1800 | | | | | | | 6. December| 1800 | | | | | | ### Cost Calculation Instructions: - **Total Hiring Cost**: Enter the amount as a whole number. - **Total Layoff Cost**: Enter the amount as a whole number. - **Total Inventory Carrying Cost**: Enter the amount as a whole number. - **Total Stockout Cost**: Enter the amount as a whole number. - **Total Cost for Plan B**: Enter your response as a whole number. #### Note: - Hiring costs are $30 per unit produced for additional workers. - Layoff costs are $65 per unit cut back. - Both hiring and layoff costs are incurred in the month the change occurs (e.g., production reduction from 1,300 to 1,000 in July necessitates a 300-unit layoff in August).
Transcribed Image Text:**Plan B Cost Analysis for Workforce and Production Demand** This exercise focuses on calculating various costs involved in adjusting workforce levels to meet production demands outlined for each month. These costs involve hiring, layoffs, inventory carrying, and stockouts. The overall objective is to determine the total cost for Plan B, excluding normal time labor costs. ### Monthly Demand and Production Table | Month | Demand | Production | Hire (Units) | Layoff (Units) | Ending Inventory | Stockouts (Units) | |------------|--------|------------|--------------|---------------|------------------|-------------------| | 1. July | 1000 | | | | | | | 2. August | 1200 | | | | | | | 3. September| 1400 | | | | | | | 4. October | 1800 | | | | | | | 5. November| 1800 | | | | | | | 6. December| 1800 | | | | | | ### Cost Calculation Instructions: - **Total Hiring Cost**: Enter the amount as a whole number. - **Total Layoff Cost**: Enter the amount as a whole number. - **Total Inventory Carrying Cost**: Enter the amount as a whole number. - **Total Stockout Cost**: Enter the amount as a whole number. - **Total Cost for Plan B**: Enter your response as a whole number. #### Note: - Hiring costs are $30 per unit produced for additional workers. - Layoff costs are $65 per unit cut back. - Both hiring and layoff costs are incurred in the month the change occurs (e.g., production reduction from 1,300 to 1,000 in July necessitates a 300-unit layoff in August).
The S&OP team at Kansas Furniture, led by David Angelow, has received estimates of demand requirements as shown in the table. Assuming one-time stockout costs for lost sales of $125 per unit, inventory carrying costs of $25 per unit per month, and zero beginning and ending inventory, evaluate these two plans on an incremental cost basis: **Plan A:** Produce at a steady rate (equal to minimum requirements) of 1,000 units per month and subcontract additional units at a $65 per unit premium cost. Subcontracting capacity is limited to 800 units per month. (Enter all responses as whole numbers.) ### Plan A: | Month | Demand | Production | Ending Inventory | Subcontract (Units) | |----------|--------|------------|------------------|---------------------| | July | 1000 | 1000 | 0 | | | August | 1200 | 1000 | 0 | | | September| 1400 | 1000 | 0 | | | October | 1800 | 1000 | 0 | | | November | 1800 | 1000 | 0 | | | December | 1800 | 1000 | 0 | | The total cost, excluding normal time labor costs, for Plan A = $ ___ (Enter your response as a whole number.) **Plan B:** Vary the workforce to produce the prior month’s demand. Demand was 1,300 units in June. The cost of hiring additional workers is $30 per unit produced. The cost of layoffs is $65 per unit cut back. (Enter all responses as whole numbers.) *Note:* Both hiring and layoff costs are incurred in the month of the change (i.e., going from production of 1,300 in July to 1000 in August requires a layoff (and related costs) of 300 units in August.) A similar table for Plan B needs to be completed with relevant columns for the cost calculations based on dynamic workforce changes, including possible hiring and layoffs, aligning production with the demand of the previous month.
Transcribed Image Text:The S&OP team at Kansas Furniture, led by David Angelow, has received estimates of demand requirements as shown in the table. Assuming one-time stockout costs for lost sales of $125 per unit, inventory carrying costs of $25 per unit per month, and zero beginning and ending inventory, evaluate these two plans on an incremental cost basis: **Plan A:** Produce at a steady rate (equal to minimum requirements) of 1,000 units per month and subcontract additional units at a $65 per unit premium cost. Subcontracting capacity is limited to 800 units per month. (Enter all responses as whole numbers.) ### Plan A: | Month | Demand | Production | Ending Inventory | Subcontract (Units) | |----------|--------|------------|------------------|---------------------| | July | 1000 | 1000 | 0 | | | August | 1200 | 1000 | 0 | | | September| 1400 | 1000 | 0 | | | October | 1800 | 1000 | 0 | | | November | 1800 | 1000 | 0 | | | December | 1800 | 1000 | 0 | | The total cost, excluding normal time labor costs, for Plan A = $ ___ (Enter your response as a whole number.) **Plan B:** Vary the workforce to produce the prior month’s demand. Demand was 1,300 units in June. The cost of hiring additional workers is $30 per unit produced. The cost of layoffs is $65 per unit cut back. (Enter all responses as whole numbers.) *Note:* Both hiring and layoff costs are incurred in the month of the change (i.e., going from production of 1,300 in July to 1000 in August requires a layoff (and related costs) of 300 units in August.) A similar table for Plan B needs to be completed with relevant columns for the cost calculations based on dynamic workforce changes, including possible hiring and layoffs, aligning production with the demand of the previous month.
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