Question

The president of Hill Enterprises, Terri Hill, projects the firm's aggregate demand requirements over the next 8 months as follows:

January	1,400	May	2,200
February	1,500	June	2,100
March	1,600	July	1,700
April	1,800	August	1,700

Her operations manager is considering a new plan, which begins in January with 200units 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 both1,600 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.

Period	Month	Demand	Production	Hire (Units)	Layoff (Units)	Ending Inventory	Stockouts (Units)
0	December	1,600	1,600	-----	-----	200	-----
1	January	1,400	1,600
2	February	1,500	1,400
3	March	1,600	1,500
4	April	1,800	1,600
5	May	2,200	1,800
6	June	2,100	2,200
7	July	1,700	2,100
8	August	1,700	1,700

a. fill out all the empty boxes

b. The total cost of hiringsequals=

c. The total cost of layoffsequals=​

d. The total inventory carrying cost​ =

e. The total stockout cost​ =

f. The total​ cost, excluding normal time labor​ costs, is​ =

Answer 1

Solution :

A : The total cost of hiring = 40,000

B . The total cost of layoff =​ 24,000

C . The total inventory carrying cost​ = 65,000

D . The total stockout cost​ = 112,500

E The total​ cost, excluding normal time labor​ costs, is​ = 241,500

PLAN COSTS Beginning Endi # Fired | Inventory | Period Demand Backorders | # Hired Backorder H Firing Regular 1600 1600 ory Inventory 0 10,000 12,500 200 16,000 2 75,000 37,500 10,000 12,500 22,500 65,000 1,12 100 14000 13800 2,500 40,000 24 000 2,41,500