Zebra Technologies Corporation (ZTC) manufactures a number of navigation packages for pleasure boats. Their plant in Alabama wants to try a fixed production schedule for the next 6 months. When regular-time production and inventory cannot meet demand, they plan on first using overtime, and if that is insufficient, they will subcontract out in order to meet demand. The forecast for the next 6 months and key production data are provided below. Demand Production Rate Production Cost Backorder Cost Overtime Cost Overtime Limit Hiring Cost Jan 700 Feb 600 Mar 400 65 units/month/employee $100/units $175/unit/month $150/unit 100 units $150/employee What would be the total cost of this plan? Apr 650 Employees Subcontracting Cost Subcontracting Limit May 850 Average Inventory Cost Initial Inventory Firing Cost Jun 1,000 10 $200/unit 200 units maximum $20/unit/month 100 units $200/employee

Practical Management Science
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Author:WINSTON, Wayne L.
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If management at ZTC is interested in a chase strategy using a hire/fire option, what is the total cost of this plan? They plan on using a
policy where if the need were for 21.2 workers, they would hire 22 workers for that quarter. (Hint: this will impact regular time production
and inventory.)
445,000
Transcribed Image Text:If management at ZTC is interested in a chase strategy using a hire/fire option, what is the total cost of this plan? They plan on using a policy where if the need were for 21.2 workers, they would hire 22 workers for that quarter. (Hint: this will impact regular time production and inventory.) 445,000
Zebra Technologies Corporation (ZTC) manufactures a number of navigation packages for pleasure boats. Their plant in Alabama wants to
try a fixed production schedule for the next 6 months. When regular-time production and inventory cannot meet demand, they plan on
first using overtime, and if that is insufficient, they will subcontract out in order to meet demand. The forecast for the next 6 months and
key production data are provided below.
Demand
Production Rate
Production Cost
Backorder Cost
Overtime Cost
Overtime Limit
Hiring Cost
Jan
700
Feb
600
Mar
400
65 units/month/employee
$100/units
$175/unit/month
$150/unit
100 units
$150/employee
What would be the total cost of this plan?
Apr
650
Employees
Subcontracting Cost
Subcontracting Limit
May
850
Average Inventory Cost
Initial Inventory
Firing Cost
Jun
1,000
10
$200/unit
200 units maximum
$20/unit/month
100 units
$200/employee
Transcribed Image Text:Zebra Technologies Corporation (ZTC) manufactures a number of navigation packages for pleasure boats. Their plant in Alabama wants to try a fixed production schedule for the next 6 months. When regular-time production and inventory cannot meet demand, they plan on first using overtime, and if that is insufficient, they will subcontract out in order to meet demand. The forecast for the next 6 months and key production data are provided below. Demand Production Rate Production Cost Backorder Cost Overtime Cost Overtime Limit Hiring Cost Jan 700 Feb 600 Mar 400 65 units/month/employee $100/units $175/unit/month $150/unit 100 units $150/employee What would be the total cost of this plan? Apr 650 Employees Subcontracting Cost Subcontracting Limit May 850 Average Inventory Cost Initial Inventory Firing Cost Jun 1,000 10 $200/unit 200 units maximum $20/unit/month 100 units $200/employee
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