Question
Input: Beg. Wkrs 22 Regular $40 Hiring $2,500 Unit/wkr 100 Overtime $60 Firing $3,000 Beg. Inv. 0 Subk $75 Inventory $7 Month Demand Reg OT
Input: | Beg. Wkrs | 22 | Regular | $40 | Hiring | $2,500 | ||
Unit/wkr | 100 | Overtime | $60 | Firing | $3,000 | |||
Beg. Inv. | 0 | Subk | $75 | Inventory | $7 | |||
Month | Demand | Reg | OT | Subk | Inv | #Wkrs | #Hired | #Fired |
Apr | 1300 | |||||||
May | 1100 | |||||||
Jun | 700 | |||||||
Jul | 500 | |||||||
Aug | 500 | |||||||
Sep | 1000 | |||||||
Oct | 1200 | |||||||
Nov | 1200 | |||||||
Dec | 5000 | |||||||
Jan | 5600 | |||||||
Feb | 7600 | |||||||
Mar | 4300 | |||||||
Total | 30000 |
BlueFans is a small company that manufactures fans. Large variations in demand due to seasonality have contributed to high costs for the company. BlueFans currently uses a level production strategy because it prefers not to hire and fire employees. However, if there is enough cost justification, the company will consider alternative production plans.
What is the cost of the current production plan? Justify your answer.
How much would BlueFans save (difference between the cost in a and the cost in b) by using a chase demand strategy? Justify your answer.
How much would BlueFans save (difference between the cost in a and the cost in c) by keeping a steady workforce of 20 workers and supplementing with over-time and subcontracting as needed.
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