Thomas Surfson, the manager of a Wilmington based surf boards manufacturing Company has developed monthly forecasts for
Question:
Thomas Surfson, the manager of a Wilmington based surf boards manufacturing Company has developed monthly forecasts for a family of surf boards. Data for the 6-month period January to June are presented in the following Tables. He needs to develop an aggregate production plan. (Questions 4,5,6,7)
Month | January | Febuary | March | April | May | June |
Expected Demand | 900 | 700 | 800 | 1000 | 1500 | 1100 |
Production Days | 20 | 20 | 20 | 20 | 20 | 20 |
Production Per Day | 50 | 50 | 50 | 50 | 50 | 50 |
Cost and Other Information
Inventory Holding Cost | Subcontracting Cost | Average Pay Rate | Overtime Pay rate | Labor hours to produce one unit | Hiring Cost | Layoff Cost |
$5/unit/month | $20 per unit | $10/hour | $17/hour | 1.6hours/unit | $300/person | $600/person |
One possible plan is to maintain a constant work force throughout the 6 month period, 10 employees. Each employee can produce 5 units in one day (8 hours).
Use the following Table as a reference to calculate the total cost for this plan (maintain a constant work force throughout the 6 month period). (Level Strategy)
Month | January | Febuary | March | April | May | June |
Expected Demand | 900 | 700 | 800 | 1000 | 1500 | 1100 |
Produce | ||||||
Ending Inventory |
4. Total Inventory Holding Cost is
a. $1,700 b. $1,800 c. $8,000 d. $9,000 e. $8,500
5. Total Regular time labor cost is
a. $17,000 b. $18,000 c. $85,000 d. 94,000 e. $96,000
Another possible plan is to produce exactly what the demand is (Chase Strategy) by hiring and layoffs as needed. Each employee can produce 5 units in one day (8 hours). They have 10 employees in the beginning of January.
Use the following Table as a reference to calculate the total cost for this plan
Month | January | Febuary | March | April | May | June |
Expected Demand | 900 | 700 | 800 | 1000 | 1500 | 1100 |
Produce | ||||||
Production Days | 20 | 20 | 20 | 20 | 20 | 20 |
Number of Employees Needed | ||||||
Number of Employees Hired | ||||||
Number of Employees laid off |
6. Total hiring cost is a. $300 b. $600 c. $1,500 d. $2,100 e. $2,400
7. Total lay off cost is a. $600 b. $1,200 c. $1,800 d. $3,600 e. $4,200
Statistics Principles and Methods
ISBN: 978-0470904114
7th edition
Authors: Richard A. Johnson, Gouri K. Bhattacharyya