Question

Consuelo​ Chua, Inc., is a disk drive manufacturer in need of an aggregate plan for July through December. The company has gathered the following data. There are 8 hours of production per day.

Costs
Holding cost	​$8/disk drive​/Month
Subcontracting	​$80/disk drive
​Regular-time labor	​$12/hour
Overtime labor	​$18/hour (above 8​ hours)
Hiring cost	​$40/worker
Layoff cost	​$80/worker

Other Data
Current workforce​ (June)	8 people
​Labor-hours/disk drive	4 hours
​Workdays/month	20 days
Beginning Inventory	150 disk drives*
Ending Inventory	​0 disk drives
​*Note that there is no holding cost for June.

What will each of the two following strategies​ cost?

​a) Vary the workforce so that production approximates demand. Chua had eight workers on board in June. (Enter all responses as whole numbers​).

Fill in the table below. ​(Enter all responses as whole numbers. In the​ hire/layoff column, use positive numbers for hires-plus signs​ omitted; negative numbers for​ layoffs.)

Month	Demand*	Beg. Inventory	Personnel on staff**	Units produced	Hire/ Layoff
0 June		150	8
1 July	400	?	?	?	?
2 August	500	?	?	?	?
3 September	550	?	?	?	?
4 October	700	?	?	?	?
5 November	800	?	?	?	?
6 December	700	?	?	?	?

​* No costs are incurred for unmet demand.

​**When computing​ "Personnel on​ Staff," if 0.5 or more of an employee is needed round up and hire one more​ employee; if less than​ 0.5, round down.

The total inventory cost​ = __. (Enter your response as a whole​ number.)

The total hiring cost​ =__. (Enter your response as a whole​ number.)

The total layoff cost =__. ​(Enter your response as a whole​ number.)

The total​ cost, excluding normal time labor​ costs, is​ = __. (Enter your response as a whole​ number.)

​b) Vary overtime only and use a constant workforce of eight.

Fill in the table below. ​(Enter all responses as whole​ numbers.)

Month	Demand*	Production (Regular)	Ending Inventory	Overtime Production
0 June			150
1 July	400	320	?	?
2 August	500	320	?	?
3 September	550	320	?	?
4 October	700	320	?	?
5 November	800	320	?	?
6 December	700	320	?	?

The total inventory carrying cost​ = __. ​(Enter your response as a whole​ number.)

The total overtime premium cost​ =__. (Enter your response as a whole​ number.)

The total​ cost, excluding normal time labor​ costs, is​ =__. (Enter your response as a whole​ number.)

Answer 1

a)

The total inventory carrying cost = 0

The total hiring cost = 40*(7+1+4+2) = 560

the total layoff cost = 80*4 = 320

The total cost excluding normal time labor cost =  Inventory cost + hiring cost + Layoff cost

= 560+320 = 880

Formula

b)

Formula