VinceCo owns a plant in Transylvania where they produce ShamWows (if you are too young to be
Question:
VinceCo owns a plant in Transylvania where they produce ShamWows (if you are too young to be familiar with this product, which was ubiquitously advertised on TV in the late 2000s, check out (www.shamwow.com). The monthly demand they must meet over the next eight months is shown below.
Month | Demand |
1 | 110,000 |
2 | 165,000 |
3 | 195,000 |
4 | 235,000 |
5 | 175,000 |
6 | 132,000 |
7 | 118,000 |
8 | 127,000 |
VinceCo currently employs 95 workers at this plant. It takes 6 minutes of worker time and $10 of materials to produce a single ShamWow. Each worker works a regular shift of 8 hours per day for 20 days per month. Each worker can work up to 15 hours of overtime per month. Workers are paid $800 per month plus $8 per hour of overtime. VinceCo can hire and lay off workers. The cost of hiring is $250 per worker, and the cost of lay off is $750 per worker. When a worker is laid off, he or she must get one month's notice. This means that a "laid off" worker stays with the plant for one month. None of the existing 95 workers are in the process of being terminated.
The inventory holding cost is 50 cents per unit per month. There are 13,000 ShamWows in inventory at the beginning of month 1, and there must be at least 15,000 ShamWows in inventory at the end of every month as safety stock. VinceCo has a policy of not allowing backlogs, and subcontracting is not an option.
Find the aggregate plan that minimizes VinceCo's cost given the information above. What is the minimum total cost? Please round to the nearest dollar.
Now suppose that the workers who received the layoff notice suffer from productivity loss during the month that they remain at the plant (after they received the layoff notice but before they leave their jobs). In particular, (i) they refuse to work any overtime, and (ii) their production of ShamWows per hour decreases by X%. How does this change the aggregate plan when X=20%? What is the minimum total cost? Please round to the nearest dollar.
College Accounting
ISBN: 978-1111528126
11th edition
Authors: Tracie Nobles, Cathy Scott, Douglas McQuaig, Patricia Bille