What is the total cost of a level plan

Assignment Help Operation Management

Reference no: EM131919743

Question: Jones Inc. is preparing an aggregate production plan for next year. The company expects demand to be 1,000 units in quarter 1; 2,000 units in quarter 2; 4,000 units in quarter 3; and 3,000 units in quarter 4. The company will have 100 units in inventory at the beginning of the year and desires to maintain at least that number at the end of each quarter as safety stock. Other information: Regular production labor cost = $100 per unit Overtime production cost per unit = $150 Inventory carrying cost = $25/unit/quarter based on quarter-ending inventory

Hiring cost = $2,000 per worker

Firing/layoff cost = $3,000 per worker

Beginning number of workers = 15

Each worker can produce 100 units per quarter.

a. What is the total cost of a level plan?

b. What is the total cost of a chase plan utilizing hiring and firing?

c. Suppose Jones management is reluctant to constantly change the workforce by hiring and firing. The company decides to hire seven additional workers at the beginning of the year. The company will build inventory in low-demand months and use it in high-demand months. In addition, if necessary, overtime will be used to meet demand requirements if there is not sufficient inventory available. What is the total cost of this plan?

Reference no: EM131919743

Questions Cloud

What annual cash flow does the security pay for years : The security sells for $24,307.85 and has a yield to maturity of 7.3 percent. What annual cash flow does the security pay for years 4 through 9?

Explain the concept of an entity and attribute : Explain the concept of an entity and attribute. What are five attributes for the entity student for a university system tracking information on students?

An analysis of the technologys influence on society : Your rough draft should reflect the progress you have made in completing each milestone related to the course project in the earlier weeks.

What type of risk does this news flash best represent : A news flash just appeared that caused about a dozen stocks to suddenly drop in value by 20 percent. What type of risk does this news flash best represent?

What is the total cost of a level plan : Jones Inc. is preparing an aggregate production plan for next year. The company expects demand to be 1,000 units in quarter 1; 2,000 units in quarter 2; 4,000.

What is the total cost to meet additional demand : Dave's Stove-Top Popcorn currently has three full-time employees who are each paid $1,500 per month. An employee can only work a maximum of 100 hours per month.

How does fema define a major disaster for making declaration : How does FEMA define a major disaster for the purpose of making a declaration? Do you think a major disaster declaration should be available for all disasters?

Why was ramping up production of these products : Why was "ramping up production" of these products, along with asset backed securities, without limit such a bad idea?

Describe the current system in use : Describe the current system in use as it applies to the operations personnel and marketing personnel. To what extent does this system help or hinder Med-Chem's.

User Account

All Pages