Arundel, Inc. develops an aggregate plan at the beginning of each year. Based on its forecasts, management
Question:
Arundel, Inc. develops an aggregate plan at the beginning of each year. Based on its forecasts, management expects demand for each quarter to be as shown below:
Summer | Fall | Winter | Spring | |
Average quarterly demand | 5,000 units | 4,000 units | 6,000 units | 8,400 units |
Assume that Arundel, Inc. started the First Quarter with 20 workers and 800 units in inventory. The company wishes to finish the Spring quarter with an inventory of 1200 units on hand. The average pay per worker is $9,000 per quarter, including benefits. Production per worker is 200 units per quarter. If necessary, overtime can be used up to 20% and overtime work, if used, is paid at 150% of regular pay. It costs $1,200 to hire a new worker and $1,600 to lay off a worker. Inventory carrying cost averages $20 per unit per quarter.
(A) Determine the total cost of using Level strategy. (You may use the table below.)
(B) Determine the cost of using the Chase strategy. (You may use the table below.)
(C) Suppose the operations manager is considering using overtime instead of the pure chase or level strategies shown in (a) and (b) above. Suppose Arundel, Inc. decided to use level plus 10% overtime during the peak demand season (Quarter 4). How many workers will the company need during the planning period? (Please show your computations to receive credit.)
Expert Answer:
c Calculation of number of workers needed Every worker production during peak season 200 units 110 2... View the full answer
