Kate Russell, the plant manager of a furniture manufacturing company, is in the process of developing a
Question:
The manufacturing plant currently has 20 full-time employees, each of whom can produce 10 units of output per month at a cost of $8 per unit. Inventory carrying cost is $4 per unit per month, and backlog cost is $10 per unit per month (in U.S. dollars). Kate is planning to hire two temporary workers to work during the peak demand months of 5, 6, and 7. Each temporary worker would cost an additional $300 for each month they work. You are asked to assist Kate in developing the following two sales and operations plans. Determine the total cost of each plan:
1. Use the full-time employees as needed for regular time production. In addition, hire the two temporary workers for periods 5, 6, and 7. Use up to 30 units of subcontracting per month to meet any excess demand at a cost of $15/unit. Also, backlogs in any given month cannot exceed 70 units. Assume no beginning inventory at the start of month 1, and there should be no ending inventory at the end of month 12.
2. Keep the regular time output constant at 200 units per month. Use up to 30 units of subcontracting when needed. No temporary workers are hired. There are no restrictions on backlogs.
Ending InventoryThe ending inventory is the amount of inventory that a business is required to present on its balance sheet. It can be calculated using the ending inventory formula Ending Inventory Formula =...
Step by Step Answer:
Operations Management Managing Global Supply Chains
ISBN: 978-1506302935
1st edition
Authors: Ray R. Venkataraman, Jeffrey K. Pinto