Consuelo Chua
Disk drive manufacturer
Need of an aggregate plan for July through December: The company has gathered the following data. There are 8 hours of production per day.
Costs:
- Holding cost per disk drive: $8
- Subcontracting cost per disk drive: $8
- Regular-time labor cost: $12/hour
- Overtime labor cost: $18/hour (above 8 hours)
- Hiring cost: $40/worker
- Layoff cost: $500/worker
Other Data:
- Current workforce (June): 150 people
- Labor-hours per disk drive: 5 hours
- Workdays per month: 20 days
- Beginning Inventory: 150 disk drives
- Ending Inventory: 0 disk drives (Note: There is no holding cost for June)
What is the following strategy's cost?
This exercise only contains part a) Vary the workforce so that production approximates demand. Chua had eight workers on board in June. (Enter all responses)
What is the understanding?
Fill in the table below: For changes in workforce, use whole numbers in the hire/layoff column. Use positive numbers for hires (plus signs omitted) and negative numbers for layoffs.
Plan Beginning Personnel Inventory Staff 150
Units produced
Hire Layoff
Month June
Demand
July August September October November
400 500 550 700 800 700
No costs are incurred for under demand.
When computing Personnel Staff, if 0.5 or more of an employee is needed, round up and hire one more employee. If less than 0.5, round down.
The total inventory cost = (Enter your response as a whole number)