Develop a production plan and calculate the annual cost for a firm whose demand forecast is fall, 11,000; winter, 8,000; spring, 6,000; summer, 13,000. Inventory at the beginning of fall is 500 units. At the beginning of fall you currently have 30 workers, but you plan to hire temporary workers at the beginning of summer and lay them off at the end of summer. In addition, you have negotiated with the union an option to use the regular workforce on overtime during winter or spring if overtime is necessary to prevent stockouts at the end of those quarters. Overtime is not available during the fall. Relevant costs are hiring, $100 for each temp; layoff $200 for each worker laid off; inventory holding, $5 per unit-quarter; backorder, $10 per unit; straight time, $5 per hour; overtime, $8 per hour. Assume that the productivity is 0.5 unit per worker hour, with eight hours per day and 60 days per season. a. What is the total cost for this plan? Relevant information includes:Backorder cost per unitHolding cost per unitNumber of WorkersHiring cost per workerLayoff cost per workerProduction time (hours) per unitStraight time labor cost per hourOvertime labor cost per hourWorking time (hrs/day)Work days per seasonBeginning inventoryAggregate Production Planning RequirementsTime PeriodForecastBeginning InventoryProduction Required (Forecast - Beginninginventory)Production hours required (# units *Production Time per unit)Production hours available (# workers * #hours per day * # days per season)Overtime hoursTemp workers (Production hrs requiredProduction hours available)/(Working time(hrs/day) * # days per season) rounded upTemp worker hours availableTotal hours availableActual Production (Production hrs available /Labor hrs required per unit)Ending Inventory (Beginning inventory +Actual production - Demand forecast)Workers hiredWorkers laid offStraight Time (Production hrs available xStraight time labor cost)OvertimeInventory costBackorder costHiring costLayoff costTotal costs$10.00$5.0030$100.00$200.002.0$5.00$8.008.0060.00500FallWinterSpringTotal CostSummer

A well-structured production plan includes optimized workflows and schedules which enable the team…

Answered: Develop a production plan and calculate…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

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Develop a production plan and calculate the annual cost for a firm whose demand forecast is fall, 11,000; winter, 8,000; spring, 6,000; summer, 13,000. Inventory at the beginning of fall is 500 units. At the beginning of fall you currently have 30 workers, but you plan to hire temporary workers at the beginning of summer and lay them off at the end of summer. In addition, you have negotiated with the union an option to use the regular workforce on overtime during winter or spring if overtime is necessary to prevent stockouts at the end of those quarters. Overtime is not available during the fall. Relevant costs are hiring, $100 for each temp; layoff $200 for each worker laid off; inventory holding, $5 per unit-quarter; backorder, $10 per unit; straight time, $5 per hour; overtime, $8 per hour. Assume that the productivity is 0.5 unit per worker hour, with eight hours per day and 60 days per season.
a. What is the total cost for this plan?