Question
In: Accounting
Problem 8-8 Plan production for a four-month period: February through May. For February and March, you...
Problem 8-8
Plan production for a four-month period: February through May. For February and March, you should produce to exact demand forecast. For April and May, you should use overtime and inventory with a stable workforce; stable means that the number of workers needed for March will be held constant through May. However, government constraints put a maximum of 5,000 hours of overtime labor per month in April and May (zero overtime in February and March). If demand exceeds supply, then backorders occur. There are 90 workers on January 31. You are given the following demand forecast: February, 80,960; March, 66,240; April, 100,080; May, 40,080. Productivity is four units per worker hour, eight hours per day, 23 days per month. Assume zero inventory on February 1. Costs are hiring, $55 per new worker; layoff, $75 per worker laid off; inventory holding, $11 per unit-month; straight-time labor, $10 per hour; overtime, $15 per hour; backorder, $20 per unit.
Develop a production plan and calculate the total cost of this plan. Note: Assume any layoffs occur at beginning of next month. (Leave no cells blank - be certain to enter "0" wherever required. Negative values should be indicated by a minus sign. Round your answers to the nearest whole number.)
| February | March | April | May | |
| Forecast | 80,960 | 66,240 | 100,080 | 40,080 |
| Beginning inventory | ||||
| Production required | ||||
| Production hours required | ||||
| Regular workforce | ||||
| Regular production | ||||
| Overtime hours | ||||
| Overtime production | ||||
| Total production | ||||
| Ending inventory | ||||
| Ending backorders | ||||
| Workers hired | ||||
| Workers laid off | ||||
| February | March | April | May | |
| Straight time | $ | $ | $ | $ |
| Overtime | ||||
| Inventory | ||||
| Backorder | ||||
| Hiring | ||||
| Layoff | ||||
| Total | $ | $ | $ | $ |
| Total cost | $ | |||
Solutions
Expert Solution
| February | March | April | May | |
| Forecast | 80,960 | 66,240 | 100,080 | 40,080 |
| Beginning inventory | 0 | 0 | 0 | 0 |
| Production required | 80,960 | 66,240 | 100,080 | 40,080 |
| Production hours required | 20240 | 16560 | 25020 | 10020 |
| Regular workforce | 110 | 90 | 90 | 90 |
| Regular production | 80960 | 66240 | 66240 | 66240 |
| Overtime hours | 0 | 0 | 5000 | 0 |
| Overtime production | 0 | 0 | 20000 | 0 |
| Total production | 80960 | 66240 | 86240 | 66240 |
| Ending inventory | 0 | 0 | 0 | 26,160 |
| Ending backorders | 0 | 0 | 13,840 | 0 |
| Workers hired | 20 | 0 | 0 | 0 |
| Workers laid off | 0 | 20 | 0 | 0 |
| February | March | April | May | |
| Straight time | $ 202,400 | $ 165,600 | $ 165,600 | $ 165,600 |
| Overtime | $ - | $ - | $ 75,000 | $ - |
| Inventory | $ - | $ - | $ - | $ 287,760 |
| Backorder | $ - | $ - | $ 276,800 | $ - |
| Hiring | $ 1,100 | $ - | $ - | $ - |
| Layoff | $ - | $ 1,500 | $ - | $ - |
| Total | $ 203,500 | $ 167,100 | $ 517,400 | $ 453,360 |
| Total cost | $ 1,341,360 |
Explanations
|
A |
B |
C |
D |
E |
F |
G |
H |
|
|
1 |
February |
March |
April |
May |
||||
|
2 |
Forecast |
80960 |
66240 |
100080 |
40080 |
Productivity |
=G3*G4*G5 |
|
|
3 |
Beginning inventory |
0 |
0 |
0 |
0 |
4 |
units per worker |
|
|
4 |
Production required |
=B2 |
=C2 |
=D2 |
=E2 |
8 |
hours per day |
|
|
5 |
Production hours required |
=B4/4 |
=C4/4 |
=D4/4 |
=E4/4 |
23 |
days per month |
|
|
6 |
Regular workforce |
=B4/G2 |
90 |
=C6 |
=C6 |
|||
|
7 |
Regular production |
=B6*G2 |
=C6*G2 |
=D6*G2 |
=E6*G2 |
|||
|
8 |
Overtime hours |
0 |
0 |
5000 |
0 |
|||
|
9 |
Overtime production |
0 |
0 |
=D8*4 |
0 |
|||
|
10 |
Total production |
=B7+B9 |
=C7+C9 |
=D7+D9 |
=E7+E9 |
|||
|
11 |
Ending inventory |
=B10-B4 |
=C10-C4 |
0 |
=E10-E4 |
|||
|
12 |
Ending backorders |
0 |
0 |
=D2-D10 |
0 |
|||
|
13 |
Workers hired |
=B6-90 |
0 |
0 |
0 |
|||
|
14 |
Workers laid off |
0 |
=B13 |
0 |
0 |
|||
|
15 |
||||||||
|
16 |
February |
March |
April |
May |
||||
|
17 |
Straight time |
=B6*8*23*10 |
=C6*8*23*10 |
=D6*8*23*10 |
=E6*8*23*10 |
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For February and March, you should produce to exact demand
forecast. For April and May, you should use overtime and inventory
with a stable workforce; stable means that the number of
workers needed for March will be held constant through May.
However, government constraints put a maximum of 5,000 hours of
overtime labor per month in April and May (zero overtime in
February and March). If demand exceeds supply, then backorders...
Plan production for a four-month period: February through May. For February and March, you should produce...Plan production for a four-month period: February through May.
For February and March, you should produce to exact demand
forecast. For April and May, you should use overtime and inventory
with a stable workforce; stable means that the number of workers
needed for March will be held constant through May. However,
government constraints put a maximum of 5,000 hours of overtime
labor per month in April and May (zero overtime in February and
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