The Purse Company produces a line of purses. The manager, Sally Smith, is interested in using a
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- The Purse Company produces a line of purses. The manager, Sally Smith, is interested in using a level aggregate plan. Inventories and back orders will be used to handle demand fluctuations. She has asked you to develop such a plan.
Use the following data to solve the first seven problems. | ||
Problem Data | ||
Cost data | ||
Regular-time labor cost per hour | $17.00 | |
Overtime labor cost per hour | $21.00 | |
Subcontracting cost per unit (labor only) | $80.00 | |
Holding cost per unit per period | $13.00 | |
Back-order cost per unit per period | $20.00 | |
Hiring cost per employee | $550.00 | |
Firing cost per employee | $400.00 | |
Capacity data | ||
Beginning workforce | 300 employees | |
Beginning inventory | 600 units | |
Labor standard per unit | 8 hours | |
Regular time available per period | 200 hours | |
Overtime available per period | 35 hours | |
Subcontracting maximum per period | 1200 units | |
Subcontracting minimum per period | 600 units | |
Demand data | ||
Period 1 | 6000 units | |
Period 2 | 5000 units | |
Period 3 | 8000 units | |
Period 4 | 6000 units | |
Period 5 | 7000 units | |
Period 6 | 5000 units |
- a. Calculate the aggregate production rate.
- b. Calculate the appropriate workforce given the aggregate production rate. If Sally will need to hire workers, include this.
- c. Show what would happen if this plan were implemented.
- d. Evaluate the plan in terms of cost, customer service, operations, and human resources.
Related Book For
Cost Accounting A Managerial Emphasis
ISBN: 978-0133138443
7th Canadian Edition
Authors: Srikant M. Datar, Madhav V. Rajan, Charles T. Horngren, Louis Beaubien, Chris Graham
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