A company has the following demand forecast next year, expressed in six bimonthly periods: Forecast Demand:...

  

Transcribed Image Text:

A company has the following demand forecast next year, expressed in six bimonthly periods: Forecast Demand: Period 1 =4,500 units Period 4 = 6,500 units Period 2 = 3,000 units Period 5 = 5,100 units Period 3 = 4,800 units Period 6 = 5,500 units The company begins the planning year with 500 units of inventory as safety stock and finish the year with the same inventory amount. The following cost data have been obtained: Each employee works 160 regular working hours per month Each unit requires 2 standard hours to produce The labour costs are $20 per normal hour and $27 per overtime hour It costs $4 per month to hold an item in the warehouse Question a) How many employees will be needed during the peak demand of 6,500 units in period 4 if no overtime production is to be scheduled? b) What will be the average labour cost for each unit if the company maintains for the entire year sufficient staff to meet the peak demand without overtime? c) What percentage above the standard-hour cost is the company's average labour cost per unit in this year due to the company's decision to maintain stable employment sufficient to serve the peak demand period without overtime? d) What is the total cost in this option (including labour and inventory cost)? Note: Round up the decimal number of employees, e.g. 36.4 is round up to 37. A company has the following demand forecast next year, expressed in six bimonthly periods: Forecast Demand: Period 1 =4,500 units Period 4 = 6,500 units Period 2 = 3,000 units Period 5 = 5,100 units Period 3 = 4,800 units Period 6 = 5,500 units The company begins the planning year with 500 units of inventory as safety stock and finish the year with the same inventory amount. The following cost data have been obtained: Each employee works 160 regular working hours per month Each unit requires 2 standard hours to produce The labour costs are $20 per normal hour and $27 per overtime hour It costs $4 per month to hold an item in the warehouse Question a) How many employees will be needed during the peak demand of 6,500 units in period 4 if no overtime production is to be scheduled? b) What will be the average labour cost for each unit if the company maintains for the entire year sufficient staff to meet the peak demand without overtime? c) What percentage above the standard-hour cost is the company's average labour cost per unit in this year due to the company's decision to maintain stable employment sufficient to serve the peak demand period without overtime? d) What is the total cost in this option (including labour and inventory cost)? Note: Round up the decimal number of employees, e.g. 36.4 is round up to 37.

Answer rating: 100% (QA)

Lets start with Step 1 Step 1 Calculate the production requirements for each period Period 1 4500 units Period 2 3000 units Period 3 4800 units Period 4 6500 units Peak Demand Period 5 5100 units Peri... View the full answer