Question

Deforrest Marine Motors manufactures engines for the speedboat racing circuit. As part of their annual planning cycle, they forecasted demand for the next four quarters. The number of available days of production and the anticipated demand are given below. They also estimated many of the costs required to conduct operations planning. Some of these key figures are listed below. Deforrest Marine Motors wishes to maintain the current number of employees for the entire year to follow a level strategy balanced with inventory and backorders as needed. What is the total cost of this plan? If management at Deforrest Marine Motors is interested in a chase strategy using a hire/fire option, what is the total cost of this plan? They plan on using a policy where if the need were for 21.2 workers, they would hire 22 workers for that quarter. (Hint: this will impact regular time production and inventory.) If management at Deforrest Marine Motors is interested in a level strategy with their current employees using overtime and subcontracting when demand cannot be balanced with inventory, what is the total cost of this plan?

Answer 1

The student's question revolves around determining the total costs associated with different production strategies for Deforrest Marine Motors. It involves calculations and analyses of level strategy, chase strategy, and a mixed strategy that includes overtime and subcontracting while considering labor and machinery costs.

Step-by-step explanation:

The question pertains to operational strategy and associated costs in a manufacturing context. Deforrest Marine Motors is exploring different production strategies: level, chase, and a combination involving overtime and subcontracting. The cost calculations for these strategies require understanding and applying concepts of labor costs, inventory management, production scheduling, and opportunity costs. The keywords such as level strategy, chase strategy, and total cost are crucial in analyzing different production scenarios that could include hiring more workers or investing in machinery, and how these decisions affect the company's operations and finances. Understanding the implications of union-negotiated wages and the productivity gains from physical capital are also essential in determining the most cost-effective production plan.