hr_om11_ism_ch13

16assuming that back orders are not permitted the

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: 0 450 0 1,100 $165,000 50  0  0  0 1,350 1,350 1,350 1,350 5,400 $162,000 Hiring Layoffs (Increase) (Decrease) 50 0 0 0 50 $2,000 0 0 0 0 0 $0 An alternative way of viewing this problem assigns the same costs to regular time production and to hiring (i.e., $162,000 and $2,000) but places holding cost at $28,000 and shortage cost at $67,500. Total cost is then $259,500. (c) Plan C: Level Strategy at 1200, plus subcontracting: Period Forecast Quarter 1 1,800 Quarter 2 1,100 Quarter 3 1,600 Quarter 4  900 Total 5,400 Cost Total Cost: $222,000 Reg. Time Production     1,200     1,200     1,200     1,200 4,800 $144,000 Overtime Subcontract Production Production      600      300  0 $0 (d, e) The boss implements Plan C because it is not only the lowest cost, but has the added advantage of providing steady employment for the employees after the initial first quarter layoff. 13.13 Assuming that back orders are not permitted, the solution is: Total cost = $11,790      900 $54,000 Inventory   0 100...
View Full Document

This document was uploaded on 01/24/2014.

Ask a homework question - tutors are online