Castergourd Home Products makes two types of butcher-block tables: the Beefeater and the Deutschlander. The two tables are made in the same facility and require the same amount of labor and equipment. In addition, we know the following:
• Each table costs $300 to make, and each requires, on average, 3.2 hours of labor.
• Each employee works 160 hours per month, and there is no effective limit on the number of employees.
• The cost of hiring or laying off an employee is $300.
• The monthly holding cost for a table is $15.
• For planning purposes, Castergourd will begin and end with 20 employees and 0 tables in inventory.
Forecasted sales for the tables are as follows:

a. Develop a top-down level production plan for Castergourd for the 10-month planning period. Calculate the total production, hiring, layoff, and inventory costs for your plan.
b. Repeat part a, except in this case develop a chase production plan.
c. Suppose hiring and layoff costs increase dramatically. In general, will this make a level plan look better or worse than a chase plan? Explain.

  • CreatedApril 10, 2015
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