mgmt 757

Togo makes riding lawn mowers and tractors. The company‚Äôs expected quarterly demand is given below in the chart.  The company will have 300 mowers in inventory at the beginning of the month and desires to maintain at least that number at the end of each month.  Below is other critical data:

 

Production cost per unit = $325

Inventory Carrying cost per quarter per unit = $50 (based on ending inventory)

Hiring Cost per worker = $350

Firing cost per worker = $700

Beginning # of workers = 40

Each worker can produce 150 units per quarter

 

Complete the tables and calculate the cost of the two plans

 

LEVEL Plan

Quarter Demand Regular Production Ending Inventory Workers Required Hire Fire

1 5000  

2 9000  

3 7000  

4 9000  

Total 30,000  

 

CHASE PLAN

Quarter Demand Regular Production Ending Inventory Workers Required Hire Fire

1 5000  

2 9000  

3 7000  

4 9000  

Total 30,000  

 

Which plan do you recommend and why? 

 

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