Question

Michael Carrigg, Inc., is disk manufacturer in need of an aggregate plan for July through December. The company has gathered the following data:
Costs________________
Holding cost ........ $8/disk/month
Subcontracting........ $80/disk
Regular-time labor...... $12/hour
Overtime labor........ $18/hour for hours above
8 hours/worker/day
Hiring cost......... $40/worker
Layoff cost.......... $80/worker
Demand*_________
July ......... 400
Aug......... 500
Sept......... 550
Oct......... 700
Nov......... 800
Dec......... 700
Other Data__________________________________________
Current workforce (June) ........... 8 people
Labor-hours/disk ............. 4 hours
Workdays/month ............. 20 days
Beginning inventory ............. 150 disks**
Ending inventory .............. 0 disks
What will each of the two following strategies cost?
(a) Vary the workforce so that production meets demand. Carrigg had eight workers on board in June.
(b) Vary overtime only and use a constant workforce of eight.



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  • CreatedJuly 23, 2013
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