Question

In: Operations Management

Latrisa International Inc. manufactures outdoor clothing apparel. They have developed a forecast for their sandal Line....

Latrisa International Inc. manufactures outdoor clothing apparel. They have developed a forecast for their sandal Line. They have hired you to help them develop their production schedule for the next six months. Please use the information below to develop the production schedule and answer the questions below.

Full time employee                  10 employees

Hourly pay rate (8hrs)              $ 8.00

Labor-hours per unit                 4 hours per unit

Subcontracting cost                  $ 20.00

Inventory carrying cost             $ 7.00

Month

(A)

Demand Forecast

(Units)

(B)

Production Days Per Month

(C)

Average Production Days Per Month

(D)

Monthly Production

(Units)

(E)

Subcontracting Production (Units)

(F)

Monthly Inventory Change

(Units)

(G)

Ending Inventory

(Units)

January

2,500

30

February

2,475

25

March

3,000

30

April

3,500

30

May

4,100

30

June

4,525

30

Production per hour               ________________

Production rate per day          ________________

Total inventory carrying cost ________________

Total regular production cost ________________

Total subcontracting cost       ________________

Total cost of plan                    ___________________

Solutions

Expert Solution

All the calculations are done based on the assumption that plant runs only for 1 shift:

Month

(A)

Demand Forecast

(Units)

(B)

Production Days Per Month

(C)

Average Production Days Per Month

(D)

Monthly Production

(Units)

(E)

Subcontracting Production (Units)

(F)

Monthly Inventory Change

(Units)

(G)

Ending Inventory

(Units)

January

2,500

30

30

600

1900

600

600

February

2,475

25

25

500

1975

500

1100

March

3,000

30

30

600

2400

600

1700

April

3,500

30

30

600

2900

600

2300

May

4,100

30

30

600

3500

600

2900

June

4,525

30

30

600

3925

600

3500

Production per hour = 10*0.25= 2.5 units/hr

Production rate per day = 10*2 = 20 units per day

Total inventory carrying cost = 3500*7 = $24500

Total regular production cost = $640*175 days = $112000

Total subcontracting cost = $20*16600 = $332000

Total cost of plan = $24500+$112000 + $332000 = $468500?


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