The president of Hill Enterprises, Terri Hill, projects the firm's aggregate demand requirements over the next 8 months as follows: January 1,400 February 1,500 March 1,700 April 1,700 May 2,100 June 2,100 July 1,800 August 1,800
Her operations manager is considering a new plan, which begins in January with 200 units of inventory on hand. Stockout cost of lost sales is $125 per unit. Inventory holding cost is $25 per unit per month. Ignore any idle-time costs. The plan is called plan A.
Plan A: Vary the workforce level to execute a strategy that produces the quantity demanded in the prior month. The December demand and rate of production are both 1,600 units per month. The cost of hiring additional workers is $50 per unit. The cost of laying off workers is $80 per unit. Evaluate this plan. (Enter all responses as whole numbers.)
Note: Both hiring and layoff costs are incurred in the month of the change. For example, going from 1,600 in January to 1,400 in February incurs a cost of layoff for 200 units in February.
A.) Fill in the table below. (Enter your responses as wholenumbers.)
Period Month Demand Production Hire(Units) Layoffs(Units) Ending Inventory(Not Including Dec) Stockouts (units)
0 Dec 1600 1600 200
1 Jan 1400 1600
2 Feb 1500 1400
3 March 1700 1500
4 April 1700 1700 5 May 2100 1700
6 June 2100 2100
7 July 1800 2100
8 Aug 1800 1800
Total ? ? ? ?
B.)Total hiring cost =? (Enter your response as a whole number)
C.)The total cost of layoffs =? (Enter your response as a whole number)
D.)The total inventory carrying cost = ? (Enter your response as a whole number)
E.) The total stockout cost =? (Enter your response as a whole number.) F.)The total cost, excluding normal time labor costs, is = ?(Enter your response as a whole number.)
