Question

Plan production for the next year. The demand forecast is: spring, 20,600; summer, 9,400; fall, 15,400; winter, 18,400. At the beginning of spring, you have 69 workers and 1,030 units in inventory. The union contract specifies that you may lay off workers only once a year, at the beginning of summer. Also, you may hire new workers only at the end of summer to begin regular work in the fall. The number of workers laid off at the beginning of summer and the number hired at the end of summer should result in planned production levels for summer and fall that equal the demand forecasts for summer and fall, respectively. If demand exceeds supply, use overtime in spring only, which means that backorders could occur in winter. You are given these costs: hiring, $130 per new worker; layoff, $260 per worker laid off; holding, $21 per unit-quarter; backorder cost, $9 per unit; regular time labor, $11 per hour; overtime, $17 per hour. Productivity is 0.5 unit per worker hour, eight hours per day, 50 days per quarter.

Find the total cost of this plan. Note: Hiring expense occurs at beginning of Fall. (Leave no cells blank - be certain to enter "O" wherever required.) Fall 15,400 Winter 18,400 15,400 30,800 77 18,400 36,800 77 Spring Summer Forecast 20,600 9,400 Beginning inventory I 1,030 Production required 9,400 Production hours required 39,140 18,800 Regular workforce 69 47 Regular production Overtime hours Overtime production Total production Ending inventory Ending backorders Workers hired Workers laid off Spring Summer Fall Winter Straight time Overtime Inventory Backorder Hiring Layoff Total Total cost

Answer 1

The best production method when labor costs $100/unit and capital costs $400/unit is Method 1, with a total cost of $9000. If the labor cost rises to $200/unit, Method 1 remains the best production method with a total cost of $14000.

Step-by-step explanation:

To determine the best production method, we must calculate the total cost for each method given the cost of labor and capital. Let's consider the following methods:

• Method 1: 50 units of labor, 10 units of capital
• Method 2: 20 units of labor, 40 units of capital
• Method 3: 10 units of labor, 70 units of capital

When the cost of labor is $100/unit and the cost of capital is $400/unit:

1. Method 1 cost = (50 * $100) + (10 * $400) = $5000 + $4000 = $9000
2. Method 2 cost = (20 * $100) + (40 * $400) = $2000 + $16000 = $18000
3. Method 3 cost = (10 * $100) + (70 * $400) = $1000 + $28000 = $29000

Thus, Method 1 is the best as it has the lowest total cost of $9000.

If the cost of labor rises to $200/unit, let's recalculate:

1. Method 1 cost = (50 * $200) + (10 * $400) = $10000 + $4000 = $14000
2. Method 2 cost = (20 * $200) + (40 * $400) = $4000 + $16000 = $20000
3. Method 3 cost = (10 * $200) + (70 * $400) = $2000 + $28000 = $30000

Even with the increased labor cost, Method 1 still has the lowest cost, thus remains the best production method

Answer 2

why is this so long
Answer: end of summer