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Use the following data for the next three questions.
Cost data:
Regular time labor cost per hour ........$10Overtime time labor cost per hour .........$15Subcontracting cost per unit (labor only) .....$80Back order cost per unit per period .......$20Inventory holding cost per unit per period ....$10Hiring cost per employee........... $500Firing cost per employee........... $400
Capacity data:
Beginning workforce 40 employeesBeginning inventory 0 unitsBeginning back orders (shortages) 0 unitsProduction standard per unit (hours) 2 hours of labor per unitRegular time available per period (hours) 160 hours per period per employeeOvertime time available per period (hours) 30 hours per period per employeeNumber of days per period 20 daysNumber of working hours per day 8 hoursSubcontracting No Limit
Demand data:
1. Suppose you are designing a level aggregate plan using inventory and back orders (shortages). You are not using any overtime or subcontracting. What will be the production rate per period in the level aggregate production plan?
2. Suppose you are designing a level aggregate plan using inventory and back orders (shortages). You are not using any overtime or subcontracting. How many workers per period (same for every period) are needed for the level aggregate plan?
3. Suppose you are using a chase strategy without inventory and back orders (shortages). In chase strategy you have to meet the demand in every period using regular time production, overtime production and subcontracting. There are 40 workers in each period. When demand is less than the regular time production capacity, you produce only the number of units that are demanded and some of the workers may remain idle. You do not hire and fire workers. How much of the total regular capacity (number of units) remain unused?
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