What is the total cost of option excluding the material cost

Assignment Help Operation Management
Reference no: EM13742248 , Length: 1

1- The New York NY plant of Computer Products produces disk drives for personal and small business computers. Ben Dover, the plant's production planning director, is looking over next year's sales forecasts for these products and will be developing an aggregate capacity plan for the plant. The quarterly sales forecasts for the disk drives are as follows:

1st Quarter 2nd Quarter 3rd Quarter 4th Quarter

2,340  2,700  2,610  2,520

Ample machine capacity exists to produce the forecast. Each disk drive takes an average of 20 labor-hours. In addition, you have collected the following information:

a. Inventory holding or carrying cost is $100 per disk drive per quarter. The holding cost is based on the inventory at the end of each quarter.

b. The plant works the same number of days in each quarter, 12 five-day weeks, 6 hours per day.

c. Beginning inventory is zero disk drives.

d. In a backlog situation, the customer will wait for his order to be filled but will expect a price reduction each quarter he waits. The backlog costs are $300 per floppy disk for the first quarter the customer waits, $700 for the second quarter the customer waits, and $900 for the third quarter the customer waits. In any quarter, if there is a backlog, this backlog will be filled before the demand for that period is filled.

e. The cost of hiring a worker is $800 while the cost of laying off a worker is $950.

f. The straight time labor rate is $20 per hour for the first quarter and increases to $22 per hour in the fourth quarter.

g. Overtime work is paid at time and a half (150%) of the straight time work.

h. Outsourcing (contract work) is paid at the rate of $475 per disk unit for the labor and you provide the material

i. Demand is projected to increase this year. Demand during the fourth quarter of the prior year was 2,340 units. The demand for the first quarter of the next year (year following the year you are analyzing) is projected to be at the 2,700 unit level.

a) You want to maintain a work force capable of producing 2,520 in a quarter and either using overtime or outsourcing as explained next for any disk units over this quantity that are required in a quarter. If additional capacity is needed during quarters one and two, the company will use overtime to meet the additional demand during each of these periods. During quarters three and four, the company will use outsourcing if needed to meet the demand during each of these periods. The company will only produce what is required during a quarter and underutilization will occur if all of the production capacity is not required. What is the total cost of this option, excluding the material cost? Be sure to include any hiring and layoff costs.

b) The company will maintain a work force capable of producing 2,340 units in a quarter. It will allow backlogs to occur until the fourth quarter when it will outsource all demand that cannot be met with its own workforce. All workers will be fully utilized each quarter. In other words, there is no underutilization. No overtime is worked during any quarter. What is the total cost of this option, excluding the material cost? Be sure to include any hiring and layoff costs.

Reference no: EM13742248

Questions Cloud

Temporary and permanent damages on the incentives : Contrast the difference between temporary and permanent damages on the incentives of people to build new houses near the cement factory
Yields an improvement that has commercial value : Recall our example of an investment of $100,000 in research that yields a pioneering invention that has no commercial value, and a subsequent investment of $50,000 in development that yields an improvement that has commercial value of $1 million.
Use the theory of transaction costs to justify protecting : Use the theory of transaction costs to justify protecting the following rights by injunction or damages: Suppose that two people choose to litigate a dispute. Should the law presume that if two parties are prepared to litigate, transaction costs must..
Potential consequences of ignoring emergent strategies : Read the following article: “Porter or Mintzberg: Whose View of Strategy Is the Most Relevant Today?”. What is the difference between deliberate strategies and emergent strategies? How might emergent strategies help with a future strategic planning p..
What is the total cost of option excluding the material cost : Inventory holding or carrying cost is $100 per disk drive per quarter. The holding cost is based on the inventory at the end of each quarter - plant of Computer Products produces disk drives for personal and small business computers
How system thinking improves operation decision making : Discuss how an organization benefits from operational planning, and how operational planning and budget planning are related. Explain how “system thinking” improves operation decision making.
Discuss customer integration and satisfaction ?change : Discuss Customer Integration and Satisfaction?Change. The initial post must include in text citations, 250 words, APA format and a reference list. Conclusion should have a question for other students to answer and ponder.
Explain impact of civil rights movement on masses of blacks : Impact of the civil rights movement on the masses of blacks in the south between 1954 and 1965.
Article about nail hair or skin health : From a a magazine or newspaper or internet ( HAS TO BE IN THE LAST 30 DAYS ) you must find an article about nail, hair or skin health

Reviews

Write a Review

 

Operation Management Questions & Answers

  Finding initial basic feasible solution

Consider the cutting stock problem that arises when a company manufactures sheets of standard width 100 and has commitments to supply 40 sections of width 40, 60 sections of width 24, and 80 sections of width 18.

  Explain how many cakes should be prepared to maximize expect

A Las Vegas supermarket bakery must decide explains how many wedding cakes to prepare for upcoming weekend. Explain how many cakes should be prepared to maximize expected profit.

  Appropriate precendence diagram

Draw the appropriate precendence diagram for this production line. B) Assign tasks to workstations and determine how much idle time is present in each cycle. C) Discuss how this balance could be improved to 100%

  Once she became a leader she continued to give employees

tim wrench was leading the client services division of amweb for seven years when he was asked to move to another

  The estimated net income and new cash flow

The companmy is considering a capital expenditure of $480,000. It has an estimated life of 4 years and no salvage value. The estimated net income and new cash flow from the project are as follows:

  Identify typical processes in manufacturing firms

Identify typical processes in manufacturing firms. Discuss explain how new product development process interacts with traditional functions in firm.

  Blending the firm''s promotion efforts

A company provides its advertising agency with a statement about a new product to use in designing an advertising campaign, and this statement includes a description of the target market, the product type, the primary benefits of using the product..

  Determining linear programming

The solution does a great job of answering the question. The solution is brief and very easy to follow along. All the steps are clearly shown. It can be easily understood by anyone with basic understanding of topic.

  What are the spot rate and forward rates

Your company possesses only US dollars. You have to make a payment in of 1,000,000 yen in a month. What are the spot rate and forward rates? Which would you choose and why? How many dollars must you spend to acquire to exact amont of yen required?

  Discuss the type of control mechanisms that managers can use

Discuss the type of control mechanisms that managers can use to monitor the performance of empowered employees. Apply this question to your case study company.

  Why standards are so important in information technology

Explain why standards are so important in information technology? What standards have been important for the growth of Internet technologies?

  Which of the following is considered to be the most negative

Which of the following is considered to be the most negative political tactic?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd