Exercise 1 Company siKs

The company siKs is the French subsidiary of siK Gmbh, based in Stuttgart.

It realizes in its factory the assembly of mp3 devices from boxes pre-assembled in Germany using components bought in South Korea.

Sales

Total sales for the last quarter are estimated at 72,000 units of mp3 devices with the following coefficients:

October	November	December
0,7	1	1,3

Production

The production is done in two steps: manual assembly from external components and then functional test using a test bench as a machine.

To better manage its production tool, the company siKS decided to opt for a regularproduction.

Inventory of finished products :

The beginning inventory on October 1st is 15,000 devices. Due to the strong seasonality, we would like to reduce the inventory to 9,000 devices by the end of December.

Production Resources:

The factory is staffed by 65 workers paid 1,700 gross per month.

Regardless of the workload problems, the company decides not to hire additional workers but to use overtime. Any overtime hour will be paid 25% more than the basic productive hourly wage.

Each worker can provide 145 productive hours per month.

It takes a worker 24 minutes to completely assemble an mp3 player.

Social security charges are 50% of the salary.

The workshops are equipped with 26 test benches for which we note a total depreciation of 3 000 per month.

The acquisition price of a new bench is 12 000 VAT excluded depreciable linearly over 5 years. The VAT rate is 20%. The payment is 50% the month the bench is delivered and installed and the rest at 60 days.

Each test bench is operational 135 hours per month.

Each mp3 device must spend 12 minutes in test.

Work to be done for the last quarter of the year (October to December):

1. Make the production program and the various tests required.

2. Establish the production budget