Question

Check my wa will have 400 mowers in inventory at the beginning of the month and desires to maintain at least that number at the end of each month. Assume hiring and layoff/firing, if necessary, occur at the beginning of the quarter. Below is other critical data: Production cost per unit = $230 Inventory carrying cost per month per unit = $50 (based on ending month inventory) Hiring cost per worker = $420 Firing cost per worker = $540 Beginning number of workers = 40 Click here for the Excel Data File Each worker can produce 100 units per quarter. a. Given the planning information, develop a level production plan and a chase production plan. (Leave no cells blank.be certain to enter"0" wherever required.) Level Plan Quarter Ending Inventory Workers Required Hire Fire 2 Regular Demand Production 4.200 8.2007 5,100 7,300 24.800 4 Total 0 0 0 0

Answer 1

1) Level Production Plan :

Total Production Required: 24,800 units.

Regular Production per quarter : 24800/4 = 6200 Units

Ending Inventory After each Period = Opening Inventory + Production - Demand

Ending Inventory After First quarter = 400 + 6200 - 4200

= 2400 Units

Each Worker can Produce 100 mowers per quarter

Number of workers at the beginning is 40

a)

Level Plan
Quarter	Demand	Regular Production	Ending Inventory	Workers Required	Existing Workers	Hire	Fire
1	4,200	6200	2400	62	40	22	0
2	8,200	6200	400	62	40	0	0
3	5,100	6200	1500	62	40	0	0
4	7,300	6200	400	62	40	0	0
	24,800		4,700			22	0

ii)

The Regular production at a period = Demand - (Inventory the period before- required Inventory this period)

The required production in the first quarter = 4200 - (400- 400) = 4200 Units

Chase Plan
Quarter	Demand	Regular Production	Ending Inventory	Workers Required	Workers at the beginning	Hire	Fire
1	4,200	4200	400	42	40	2	0
2	8,200	8200	400	82	42	40	0
3	5,100	5100	400	51	82	0	31
4	7,300	7300	400	73	51	22	0
	24,800		1,600			64	31

b)

Particulars			Amount
Total Cost for Level Plan			$59,48,240
Total Cost for Chase Plan			$58,27,620

i)

Level Plan
Particulars			Amount
Production Cost ( 24800 * $230 )			$57,04,000
Inventory Carrying Cost is (4700*$50)			$2,35,000
Hiring Costs is ( 22 Workers * $420 )			$9,240
Total Cost			$59,48,240

ii)

Chase Plan
Particulars			Amount
Production Cost ( 24800 * $230 )			$57,04,000
Inventory Carrying Cost is (1600*$50)			$80,000
Hiring Costs is ( 64 Workers * $420 )			$26,880
Firing Costs is ( 31 Workers * $540 )			$16,740
Total Cost			$58,27,620