Chapter 13, Problem 1P

a.

Summary Introduction

Interpretation:

The calculation of the aggregate production rate.

Concept Introduction:

The calculation of the production rate per period (PR) is done using the following formula:

  $P_R=\frac{\text{Total Demand}-\text{Inventory}}{\text{Total no}\text{. of period}}$

b.

Summary Introduction

Interpretation:

The calculation of the appropriate workforce given the aggregate production rate.

Concept Introduction:

The calculation of the workforce (W) required is done using the following formula:

  $W=\left(\frac{\text{Production rate per period}\times \text{Labor standard}}{\text{Regular time available per period}}\right)$

c.

Summary Introduction

Interpretation:

The evaluation of the current production plan on the basis of inventory and back orders.

Concept Introduction:

Inventory is the stock of goods maintained by the company to sell it further. It is the part of daily business activities and help the company to earn profit and run its business.

d.

Summary Introduction

Interpretation:

The calculation of the cost for the plan.

Concept Introduction:

The costs of this plan can be calculated using the following formulas, as shown below:

1. Backorder costs (Cb):

  $C_b=\text{Black-order Quantity}\times \text{Black-order Cost}$

2. Holding costs (Ch):

  $C_h=\text{Inventory}\times \text{Holding Cost per unit}$

3. Labor cost (CL):

  $C_L=\text{Production rate}\times \text{No}\text{. of periods}\times \text{unit production time}\times \text{cost per hour}$

4. Total cost (C):

  $C=C_b+C_h+C_L$

e.

Summary Introduction

Interpretation:

The evaluation of the plan in terms of cost, customer service, operations and human resources.

Concept Introduction:

The costs of this plan can be calculated using the following formulas, as shown below:

1. Backorder costs (Cb):

  $C_b=\text{Black-order Quantity}\times \text{Black-order Cost}$

2. Holding costs (Ch):

  $C_h=\text{Inventory}\times \text{Holding Cost per unit}$

3. Labor cost (CL):

  $C_L=\text{Production rate}\times \text{No}\text{. of periods}\times \text{unit production time}\times \text{cost per hour}$

4. Total cost (C):

  $C=C_b+C_h+C_L$