The production rate will equal the demand

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Reference no: EM131793633

A manufacturerof roofing supplies has developed monthly forecasts for a family of products. Data for the 6-month period from

January to June are presented below

Month Expected demand Production days Demand per day

Jan. 900 22 41

Feb. 700 18 39

Mar. 800 21 38

Apr. 1200 21 57

May 1500 22 68

Jun. 1100 20 55

Cost information for the production is as below:

Inventory carrying cost $ 5 per unit per month

Average pay rate $ 10 per hour ($ 80 per day)

Labor-hours to produce a unit 1.6 hours per unit

Cost of increasing daily production rate $ 300 per unit

Cost of decreasing daily production rate $ 600 per unit

Assume we are varying the workforce size by hiring and layoffs as necessary, the production rate will equal the demand. Calculate the total cost of this production plan.

Reference no: EM131793633

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