Question

The monthly forecasts for product x%2the monthly forecasts for product x for january, february, and march are 1,040, 1,460, and 1,240, respectively. safety stock policy recommends that half of the forecast for that month be defined as safety stock. there are 22 working days in january, 19 in february, and 21 in march. beginning inventory is 540 units. storage cost is $3 per unit per month based on ending inventory level, standard pay rate is $7 per hour, hiring and training cost is $260 per worker, layoff cost is $360 per worker, and worker productivity is 0.1 unit per hour. assume that you start off with 47 workers and that they work 8 hours per dayfor january, february, and march are 1,040, 1,460, and 1,240, respectively. safety stock policy recommends that half of the forecast for that month be defined as safety stock. there are 22 working days in january, 19 in february, and 21 in march. beginning inventory is 540 units. storage cost is $3 per unit per month based on ending inventory level, standard pay rate is $7 per hour, hiring and training cost is $260 per worker, layoff cost is $360 per worker, and worker productivity is 0.1 unit per hour. assume that you start off with 47 workers and that they work 8 hours per day

Answer 1

This business problem focuses on inventory and workforce management for a company's product, considering forecasted sales, safety stock, and various associated costs. The goal is to work out the optimal number of workers needed to meet production targets while minimizing costs given constraints like labor productivity and initial inventory levels.

Step-by-step explanation:

The question involves a business scenario where an organization needs to plan inventory, production, and workforce management for product X over a three-month period, taking into account various costs such as storage, labor, hiring and training, and layoffs. The company needs to calculate safety stock, assess the productivity of workers, and optimize costs while maintaining enough workforce to meet the production forecasts.

Given the monthly forecasts, safety stock is defined as half of the monthly forecast, which would be 520, 730, and 620 units for January, February, and March, respectively. The beginning inventory for January is 540 units. Additionally, we know the number of working days for each month and the standard costs associated with labor, hiring, storage, and layoffs. Labor productivity is defined as 0.1 units per hour per worker.

To calculate the required workforce and manage the costs effectively, a company would first need to estimate the total number of units that need to be produced each month, subtracting the starting inventory and adding safety stock. The result would then determine how many work hours are necessary given worker productivity, and this will influence the decision to hire or layoff workers, based on the standard pay rate and associated costs.