This company has the following aggregate demand requirements and other data for the upcoming four quarters. Quarter Demand Previous quarter's output 1500 units 1 1400 Beginning inventory 200 units 2 1000 Stockout cost $50 per unit 3 1500 Inventory holding cost $8 per unit at end of quarter 4 1300 Hiring workers $5 per unit     Laying off workers $10 per unit     Unit cost $30 per unit     Overtime $10 extra per unit   Which of the following production plans is better: Plan 1—chase demand by hiring and layoffs; or Plan 2—produce at a constant rate of 1200 and obtain the remainder from overtime?   Finish the calculation. Plan 1.     Demand Regular Time Capacity Regular Time Production Hire Fire Initial Inventory           Period 1 1,400 1200       Period 2 1,000         Period 3 1,500         Period 4 1,300         Total (units) 5,200               @$30/unit @$5/unit @$10/unit Subtotal Costs     $?????? $???? $???? Total Cost $??????         Plan 2:   Demand Regular Time Capacity Overtime Capacity Regular Time Production Overtime Production Inventory (end PD) Fire Initial Inventory           200.   Period 1 1,400 1,200           Period 2 1,000             Period 3 1,500             Period 4 1,300             Total (units) 5,200                     @$30/unit @$30+@$10 = @$40/unit @$8/unit @$10/unit Subtotal Costs       $?????? $???? $???? $???? Total Cost $??????               I need a detailed explanation on how to do this problem. Thank you.

Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
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This company has the following aggregate demand requirements and other data for the upcoming four quarters.

Quarter

Demand

Previous quarter's output

1500 units

1

1400

Beginning inventory

200 units

2

1000

Stockout cost

$50 per unit

3

1500

Inventory holding cost

$8 per unit at end of quarter

4

1300

Hiring workers

$5 per unit

 

 

Laying off workers

$10 per unit

 

 

Unit cost

$30 per unit

 

 

Overtime

$10 extra per unit

 

Which of the following production plans is better: Plan 1—chase demand by hiring and layoffs; or

Plan 2—produce at a constant rate of 1200 and obtain the remainder from overtime?

 

Finish the calculation.

Plan 1.

 

 

Demand

Regular Time Capacity

Regular Time Production

Hire

Fire

Initial Inventory

 

 

 

 

 

Period 1

1,400

1200

 

 

 

Period 2

1,000

 

 

 

 

Period 3

1,500

 

 

 

 

Period 4

1,300

 

 

 

 

Total (units)

5,200

 

 

 

 

 

 

 

@$30/unit

@$5/unit

@$10/unit

Subtotal Costs

 

 

$??????

$????

$????

Total Cost

$??????

 

 

 

 

Plan 2:

 

Demand

Regular Time Capacity

Overtime Capacity

Regular Time Production

Overtime Production

Inventory (end PD)

Fire

Initial Inventory

 

 

 

 

 

200.

 

Period 1

1,400

1,200

 

 

 

 

 

Period 2

1,000

 

 

 

 

 

 

Period 3

1,500

 

 

 

 

 

 

Period 4

1,300

 

 

 

 

 

 

Total (units)

5,200

 

 

 

 

 

 

 

 

 

 

@$30/unit

@$30+@$10 = @$40/unit

@$8/unit

@$10/unit

Subtotal Costs

 

 

 

$??????

$????

$????

$????

Total Cost

$??????

 

 

 

 

 

 

 

I need a detailed explanation on how to do this problem. Thank you.

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