Michael Carrigg Inc., is a disk drive manufacturer in need of an aggregate plan

Question

Michael Carrigg Inc., is a disk drive manufacturer in need of an aggregate plan for July through December. The company has gathered the following data givenin the tables.there are 8 hours of production per day. You manage a consulting firm down the street from michael carrigg inc., and to get your foot in the door, you have told mr. carigg that you can do a better job at aggregate planning than his current staff. He said "fine. you do that, and you have a 1-year contract. To make good on your boast, you propose a new strategy. Hire 5 workers in august and 5 more in october, adn subcontract to meet the rest of the demand. What will be the cost of this strategy?

Fill in the table below.(enter all responses as whole numbers. In the hire/fire column, use positive numbers for hires-plus signs omitted; negative numbers for layoffs.)

The total hiring cost = $_ (enter your response as a whole number)

The total inventory carrying costs = $_ (enter your response as a whole number)

The total cost, excluding normal time labor costs, is=$_ (enter your response as a whole number)

Costs holding costs $8/disk drive/Month Subcontracting $80/disk drive regular-time labor $12 overtime labor $18/hour (above 8 hours) hiring cost $40/worker layoff cost $80/worker

Explanation / Answer

Answer:

Production costs, inventory costs, and hiring costs need to be summed (since we’re not firing anyone, we don’tneed to consider severance costs).

Each employee is paid $25,000 per year and works the whole year,

so production costs are $25,000 * 10 * 5 = $ 1,250,000.

Summing the ending inventories, a total of 1,665,000 packages were held,

so inventory costs are 1,665,000 * 0.04 = $ 66,600.

Finally, 7 employees were hired withtraining costs of $500 each,

so hiring costs are 7 * 500 = $ 3500.Total costs are then 1,250,000 + 66,600 + 3,500= $ 1,320,100.

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