Plan production for the next year. The demand forecast is spring, 20,500; summer
ID: 331977 • Letter: P
Question
Plan production for the next year. The demand forecast is spring, 20,500; summer, 9,800; fall, 15,400; winter, 17,600. At the beginning of spring you have 64 workers and 980 units in inventory. The union contract specifies that you may lay off workers only once a year, at the beginning of summer. Also, you may hire new workers only at the end of summer to begin regular work in the fall. The number of workers laid off at the beginning of summer and the number hired at the end of summer should result in planned production levels for summer and fall that equal the demand forecasts for summer and fall, respectively. If demand exceeds supply, use overtime in spring only, which means that backorders could occur in winter. You are given these costs: hiring, $70 per new worker; layoff, $140 per worker laid off; holding, $19 per unit-quarter; backorder cost, $10 per unit; straight-time labor, $12 per hour; overtime, $18 per hour. Productivity is 0.5 unit per worker hour, eight hours per day, 50 days per quarter.
Find the total cost of this plan. Note: Hiring expense occurs at beginning of Fall. (Leave no cells blank - be certain to enter "0" wherever required.)
Plan production for the next year. The demand forecast is spring, 20,500; summer, 9,800; fall, 15,400; winter, 17,600. At the beginning of spring you have 64 workers and 980 units in inventory. The union contract specifies that you may lay off workers only once a year, at the beginning of summer. Also, you may hire new workers only at the end of summer to begin regular work in the fall. The number of workers laid off at the beginning of summer and the number hired at the end of summer should result in planned production levels for summer and fall that equal the demand forecasts for summer and fall, respectively. If demand exceeds supply, use overtime in spring only, which means that backorders could occur in winter. You are given these costs: hiring, $70 per new worker; layoff, $140 per worker laid off; holding, $19 per unit-quarter; backorder cost, $10 per unit; straight-time labor, $12 per hour; overtime, $18 per hour. Productivity is 0.5 unit per worker hour, eight hours per day, 50 days per quarter.
Explanation / Answer
The formulae used:
OT Lay Spring Summer Fall Winter Forecast 20500 9800 15400 17600 Beginning Inv 980 0 2800 0 Prod Req 19520 9800 15400 17600 Hours per unit 2 Prod Hour Req 39040 19600 30800 35200 Reg Work force 64 63 63 63 8 50 64 Prod Hour Available Reg 25600 25200 25200 25200 Daily Hours Days avail Starting Workforce Overtime hours 13440 0 0 0 Overtime production 6720 0 0 0 Temp workers 0 0 0 0 Temp workers hours Available 0 0 0 0 Summer fall Total hours Available 39040 25200 25200 25200 Total req Man power Actual prod 19520 12600 12600 12600 25200 63 Ending Inv 0 2800 0 -5000 63 Workers Hired 0 0 0 0 Workerd Laid off 0 1 0 0 Back order 0 0 0 5000 12 Strait time 307200 302400 302400 302400 18 Overtime 241920 0 0 0 19 Inventory 0 53200 0 0 10 Back order 0 0 0 50000 70 Hiring 0 0 0 0 140 lay off 0 140 0 0 Total 549120 355740 302400 352400 Annual cost 1559660