Plan production for a four-month period: February through May. For February and
ID: 463992 • Letter: P
Question
Plan production for a four-month period: February through May. For February and March, you should produce to exact demand forecast. For April and May, you should use overtime and inventory with a stable workforce; stable means that the number of workers needed for March will be held constant through May. However, government constraints put a maximum of 5,000 hours of overtime labor per month in April and May (zero overtime in February and March). If demand exceeds supply, then backorders occur. There are 90 workers on January 31. You are given the following demand forecast: February, 82,432; March, 66,240; April, 100,040; May, 40,040. Productivity is four units per worker hour, eight hours per day, 23 days per month. Assume zero inventory on February 1. Costs are hiring, $50 per new worker; layoff, $70 per worker laid off; inventory holding, $9 per unit-month; straight-time labor, $10 per hour; overtime, $15 per hour; backorder, $18 per unit. Develop a production plan and calculate the total cost of this plan. Note: Assume any layoffs occur at beginning of next month. (Leave no cells blank - be certain to enter "0" wherever required. Negative values should be indicated by a minus sign. Round your answers to the nearest whole number.) February March April May Forecast 82,432 66,240 100,040 40,040 Beginning inventory Production required Production hours required Regular workforce Regular production Overtime hours Overtime production Total production Ending inventory Ending backorders Workers hired Workers laid off February March April May Straight time $ $ $ $ Overtime Inventory Backorder Hiring Layoff Total $ $ $ $ Total cost $
Explanation / Answer
Productivity
4
units/worker/hr
Days available per month
23
Productivity per unit
0.25
hours per unit
Hours available per day
8
Beginging Workforce
90
Regular Hours available per month
23 x 8 =184 hrs per mnth
Beg. Inv.
0
Strategy
Chase
Chase
Stable Wrk
Stable wrk
Month
February
March
April
May
Formulas
Forecast
82,432
66,240
100,040
40,040
Beginning inventory
0
0
0
-13800
Forecast - Beg. Inv.
Production required
82432
66240
100040
53840
Prod. Req. x productivity(0.25)
Production hours required
20608
16560
25010
13460
Prod. Hrs. req/Prod. Hrs. Available
Regular workforce
112
90
90
90
Regular workforces x Prod. Hrs. Available
Regular production hrs.
20608
16560
16560
16560
OT = min(5000, Prod. Hrs req. - reg. prd. Hrs)
Overtime hours
0
0
5000
0
OT hrs./productivity
Overtime production
0
0
20000
0
Rrg. Prod. Hrs/productivity + OT prod.
Total production
82432
66240
86240
66240
Total prod. - prod. Req.
Ending inventory
0
0
0
12400
Total prod. - prod. Req.
Ending backorders
0
0
-13800
0
Workers hired
22
0
0
0
Workers laid off
0
22
0
0
Cost
February
March
April
May
$10.00
Straight time
$206,080
$165,600
$250,100
$134,600
$15.00
Overtime
$0
$0
$300,000
$0
$9.00
Inventory
$0
$0
$0
$111,600
$18.00
Backorder
$0
$0
$248,400
$0
$50.00
Hiring
$1,100
$0
$0
$0
$70.00
Layoff
$0
$1,540
$0
$0
Total
$207,180
$167,140
$798,500
$246,200
Total cost
$1,419,020
Straight time cost per month = Regular production hours x $10.00 per hour
Overtime cost = OT production (units) x $15.00 per unit
Inventory Cost = Ending Inventory x $9.00 per unit per month
Backorder Cost = Backorder quantity x $18 per unit
Hiring cost = Number of workers hired x $50.00 per hired worker
Layoff cost = Number of workers layoff x $70.00 per layoff worker
Total cost of Plan = $1,419,020
Productivity
4
units/worker/hr
Days available per month
23
Productivity per unit
0.25
hours per unit
Hours available per day
8
Beginging Workforce
90
Regular Hours available per month
23 x 8 =184 hrs per mnth
Beg. Inv.
0
Strategy
Chase
Chase
Stable Wrk
Stable wrk
Month
February
March
April
May
Formulas
Forecast
82,432
66,240
100,040
40,040
Beginning inventory
0
0
0
-13800
Forecast - Beg. Inv.
Production required
82432
66240
100040
53840
Prod. Req. x productivity(0.25)
Production hours required
20608
16560
25010
13460
Prod. Hrs. req/Prod. Hrs. Available
Regular workforce
112
90
90
90
Regular workforces x Prod. Hrs. Available
Regular production hrs.
20608
16560
16560
16560
OT = min(5000, Prod. Hrs req. - reg. prd. Hrs)
Overtime hours
0
0
5000
0
OT hrs./productivity
Overtime production
0
0
20000
0
Rrg. Prod. Hrs/productivity + OT prod.
Total production
82432
66240
86240
66240
Total prod. - prod. Req.
Ending inventory
0
0
0
12400
Total prod. - prod. Req.
Ending backorders
0
0
-13800
0
Workforce req. - begining WorkforceWorkers hired
22
0
0
0
Begining workforce - workforce req.Workers laid off
0
22
0
0
Cost
February
March
April
May
$10.00
Straight time
$206,080
$165,600
$250,100
$134,600
$15.00
Overtime
$0
$0
$300,000
$0
$9.00
Inventory
$0
$0
$0
$111,600
$18.00
Backorder
$0
$0
$248,400
$0
$50.00
Hiring
$1,100
$0
$0
$0
$70.00
Layoff
$0
$1,540
$0
$0
Total
$207,180
$167,140
$798,500
$246,200
Total cost
$1,419,020