CHAPTER 13 TECHNCIAL CASE #13 PLEASE READ THIS ***ONLY ANSWER TABLE 3 AND THE QUESTIONS UNDERNEATH***

A prominent window manufacturer in Western Pennsylvania is debating in its senior management meetings how to handle their labor force. The demand for their windows has increased and they are planning the workforce for 2021. Table 1 is their relevant costs:

TABLE 1

INVENTORY CARRYING COST

$5 per unit per month

SUBCONTRACTING COST (per unit)

$46 per unit

AVERAGE PAY RATE (per hour / per 8-hour day - each worker work 8 hours/day)

$10 per hour / $80 per day

OVERTIME PAY RATE (every hour >8 in a day)

$15 per hour (above 8 hours per day)

LABOR HOURS TO PRODUCE A WINDOW

4 hours per unit

COST OF INCREASING DAILY PRODUCTION RATE (recruiting, hiring, and training)

$400

COST OF DECREASING DAILY PRODUCTION RATE (unemployment for layoffs)

$600

Table 2 is their production, demand, and inventory data (most people do not want windows installed in the coldest months of the years but demand for good windows increases in late spring before the summer heat):

TABLE 2

MONTH

PRODUCTION DAYS

PRODUCTION @ 100 UNITS/DAY

DEMAND FORECAST

MONTHLY INVENTORY CHANGE

ENDING INVENTORY

January

20

2000

400

February

20

2000

800

March

23

2300

2000

April

22

2200

2800

May

22

2200

4000

June

22

2200

2900

TOTALS

Complete Table 2. Tell me the total number of production days: Tell me the total units of inventory carried over from month to month and the total ending inventory: Tell me the workforce needed to produce the required units per day and why: Complete Table 3: TABLE 3

COSTS

CALCULATIONS

Inventory Carrying

Regular Time Labor

Other Costs

TOTAL COST

What month is the minimum monthly demand on which the constant workforce is established? What is the amount of production that can be made IN-HOUSE over this 6-month period? What is the amount of production that must be SUBCONTRACTED over this 6-month period? Which method is most cost-efficient keep all production in-house with a constant workforce or subcontract the expensive amounts during peak period? What factors might impact the companys decision to go one way or the other? What happens if the subcontractor drops his costs $6 to $40?

here is the answer to the 1st four questions

90 2000 1600 1600 month for media produchen demand Tour ending change in Jan 400 feb March 0000 800 1000 3900 23 3300 9000 300 3100 9200 9800 2500 1-600 May TOO 2000 22 4000 -1800 fun 22 2200 0 2900 - TOD 2199 1. Total number gf poroduction days 2. Member of unile canico over from month to month are Jolal ending chventorej 10100 Moth face nudeo - dime needed to produce 100 too unito feday/ time available giren in table 000 - 50 cozt Ine carrying - 4x100 8 cort = 5X10 Top : 53500 516000 regular time labour : 10948250x 10 Alole do pes policies o con anwer fiut u parte of question. Anconvencie u vregralled og no:- 1. Month Jan Feb Mar Apr | May jun Prod.days 20 20 23 22 22 22 Production 12000 2000 230D 2200 2200 2200 demand 400 BOD 2000 2800 4000 2900 Iny change 1600 1200 300 -600 Ending inv 1600 2BDD 3100 1250D 700 D -1800 -700 2. Total number of production days=129 3. Number of units carried over from month to month are given in table. Total ending inventory is 10700. 4. Workforce needed = time needed to produce 100 units per day / time available = 4*100/8 =50 Cozt Inv carrying cost - 5x10700 =53500 Regular time labour = 129x8X50 x10=516000 90 2000 1600 1600 month for media produchen demand Tour ending change in Jan 400 feb March 0000 800 1000 3900 23 3300 9000 300 3100 9200 9800 2500 1-600 May TOO 2000 22 4000 -1800 fun 22 2200 0 2900 - TOD 2199 1. Total number gf poroduction days 2. Member of unile canico over from month to month are Jolal ending chventorej 10100 Moth face nudeo - dime needed to produce 100 too unito feday/ time available giren in table 000 - 50 cozt Ine carrying - 4x100 8 cort = 5X10 Top : 53500 516000 regular time labour : 10948250x 10 Alole do pes policies o con anwer fiut u parte of question. Anconvencie u vregralled og no:- 1. Month Jan Feb Mar Apr | May jun Prod.days 20 20 23 22 22 22 Production 12000 2000 230D 2200 2200 2200 demand 400 BOD 2000 2800 4000 2900 Iny change 1600 1200 300 -600 Ending inv 1600 2BDD 3100 1250D 700 D -1800 -700 2. Total number of production days=129 3. Number of units carried over from month to month are given in table. Total ending inventory is 10700. 4. Workforce needed = time needed to produce 100 units per day / time available = 4*100/8 =50 Cozt Inv carrying cost - 5x10700 =53500 Regular time labour = 129x8X50 x10=516000