question archive Jason Enterprises (JE) produces video telephones for the home market
Jason Enterprises (JE) produces video telephones for the home market
Subject:FinancePrice: Bought3
Jason Enterprises (JE) produces video telephones for the home market. Quality is not quite as good as it could be at this point, but the selling price is low and Jason can study market response while spending more time on R&D. At this stage, however, JE needs to develop an aggregate production plan for the six months from January through June. You have been commissioned to create the plan. The following information should help
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DEMAND AND WORKING DAYS |
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JANUARY |
FEBRUARY |
MARCH |
APRIL |
MAY |
JUNE |
TOTALS |
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Demand Forecast |
500 |
600 |
650 |
800 |
900 |
800 |
4250 |
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Number of working days |
22 |
19 |
21 |
21 |
22 |
20 |
125 |
Straight-time cost (first eight hours each day $12.50/ hour)
Shortage cost $20/unit/per month
Inventory holding cost $10.00/unit/ per month
Beginning inventory - 200 units
Assume: There are 10 full time workers working 8 hour/day. Each worker needs 4 hours to produce one unit.
plan with constant workforce, vary inventory and stock out.
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JANUARY |
FEBRUARY |
MARCH |
APRIL |
MAY |
JUNE |
TOTAL |
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Working days per month |
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Production hours available (Working days per month × 8 hr./day × 10 workers) |
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Actual production (Production hours available/4 hr./unit |
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Demand forecast |
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Ending inventory (Beginning inventory + Actual production − Demand forecast) |
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Shortage cost (Units short × $20) |
$
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$
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$
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$
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$
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$
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$
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Safety Stock |
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Units excess (Ending inventory − Safety stock; only if positive amount) |
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Inventory cost (Units excess × $10) |
$
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$
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$
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$
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$
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$
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$
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Straight-time cost (Production hours available × $12.50) |
$
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$
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$
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$
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$
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$
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$
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Total Cost |
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