Determine the envelope production plan

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Reference no: EM131714696

The manufacturing department of XYZ Company is planning its production level over the next twelve months. Based on orders received and sales forecasts provided by the marketing department, the estimate of monthly demand forecast for the twelve-month period is as follows:

TABLE

Month 1 2 3 4 5 6

Forecasted Demand (000) 7 9 10 16 18 17

Month 7 8 9 10 11 12

Forecasted Demand (000) 6 7 8 5 8 5

The monthly unit holding cost is $4, hiring cost is $2000; the cost of laying off a worker is $2000, employee works 40 hours per week with monthly salary of $3200. Each worker can produce 50 units per month. Current starting inventory is 500 units, the initial workforce level is 150 and the maximum physical capacity is 15000 units per month.

(a) Determine the envelope production plan for XYZ Company.

(b) Determine the cost of the plan you obtained in (a).

Reference no: EM131714696

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