Question Description
Question has been attached.
Capacity Planning Homework Assignment—To be Submitted
The Baltimore Manufacturing Company’s management forecasts demand for each quarter as follows:
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First Quarter |
Second Quarter |
Third Quarter |
Fourth |
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Average quarterly demand |
7000 units |
9000 units |
10000 units |
8000 units |
Assume that Arundel, Inc. started the First Quarter with 20 workers and 2000 units in inventory.The company wishes to finish the year with an inventory of 5000 units on hand.The average pay per worker is $9,000 per quarter, including benefits.Production per worker is 100 units per quarter.If necessary, overtime can be used up to 20% during the two peak demand quarters.Overtime time work, if used, is paid at 150% of regular pay.It costs $900 to hire a new worker and $1,200 to lay off a worker.Inventory carrying cost averages $10 per unit per month.
(A)Using the table below, determine the total cost of using Level strategy.
Resources |
Summer |
Fall |
Winter |
Spring |
Total |
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Beg.Inventory |
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Production |
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Demand |
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Ending Inventory |
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Costs |
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Regular labor cost |
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Hiring/firing cost |
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Inv. Carrying cost |
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Other costs, if any |
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Total |
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(B)Using the table below, determine the cost of using the Chase strategy.
Resources |
Summer |
Fall |
Winter |
Spring |
Total |
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Beg.Inventory |
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Production |
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Demand |
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Ending Inventory |
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Costs |
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Regular labor cost |
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Hiring/firing cost |
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Inv. Carrying cost |
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Other costs, if any |
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Total |
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(C) Which strategy do you recommend and why?
For Bonus Points
(D) Management is considering using a mixed strategy. Suppose level strategy plus 10% overtime is used for the two high demand seasons, how many workers will be needed.(You don’t need to compute the total costs in this case.Simply determine the number of workers that will be need.
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