Problem 13-7 Trexoid Inc. makes a popular video game console. Demand varies each
ID: 335820 • Letter: P
Question
Problem 13-7 Trexoid Inc. makes a popular video game console. Demand varies each month, with highest demand coming in the last quarter of the year. Regular production costs are $230 per unit and inwentory carrying cost is $2 per unit per quarter. Overtme production cost is $260 per unit Assume that the 15 current Trexoid employees can produce a total of 30,000 units per quarler in regular production and can work encugh overtime hours to produce the amount required if a chase plan is employed. On the other hand, hiring cost is $5,000 per employee and firing oost s $10,000 pe o p oy00. Tre o c enty has zo o n en ry on hand and hey woud "ke to have zero inventories at the end of te y ar. Assum hlmg and ay m ng necess occur at the beginning o the quarter. Forecasted de mand is 1 ? Quarter 1 Quarter 2 Quarter 3 Quarter 4 22.000 urits 20,000 urits 40.000 urite 142.000 urits a. Given the above demand estimate, develap a producton plan based on level production. (Leave no cells blank -be certain to enter "O wherever required. Answer is complete but not entirely correct. Regular Ending Number of Fire Demand 22.000 20.000 40,000 142,000 224.000 Hire 30,000 8,000 8 300006 18,00015 40,000 6 34,000 234,000 8.000 83 Total 34,000 52 b. Determine the cost of the level preducion plan. &Answer; is complete but not entirely correct. icost 48,000Explanation / Answer
A. (30000/15) Rate 230 2000 2 5000 10000 Demand RP EI=RP-D+EI(t-1) Quarter Demand Regular Prod Ending Inv No of workers Hire Fire 1 22000 56000 34000 28 13 0 2 20000 56000 70000 28 0 0 3 40000 56000 86000 28 0 0 4 142000 56000 0 28 0 0 Total 224000 224000 190000 112 13 0 Average 56000 Workers 28 (56000/2000) B. Total Cost 51965000 (230*224000+2*190000+13*5000)