Question

The 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 day

Answer 1

The question deals with business operations, focusing on inventory management, labor adjustments, and cost management strategies. Calculations for safety stock, labor requirements, and storage costs are necessary based on the provided forecasts and operational costs.

Step-by-step explanation:

The provided scenario involves business operations analysis, with a specific focus on inventory management, cost calculations, and workforce adjustments. To handle safety stock policy, we calculate that half of each month's forecast for product X as safety stock would be 520 units for January, 730 units for February, and 620 units for March. The company aims to manage storage costs at $3 per unit per month based on ending inventory and adjust the number of workers based on productivity to meet the production demand, considering the standard pay rate, hiring, and layoff costs. Economies of scale, production methods with varying labor and capital costs factor into the decision-making process for optimizing production and costs.

The subject of this question is business. It involves analyzing the costs and production methods of a company.The company uses three production methods with different amounts of labor and capital. The best production method is determined by comparing the costs of hiring labor and the cost of capital. If labor costs rise, the company should switch to a different production method.In this case, hiring labor costs $100 per unit and a unit of capital costs $400. The company should use Method 2, which requires 20 units of labor and 40 units of capital. If the cost of labor rises to $200 per unit, the company should switch to Method 1, which requires 50 units of labor and 10 units of capital.