January

Beginning inventory 400

Demand forecast 1,800
25% Safety stock (25% x Demand forecast) 450
Production requirement (Demand forecast + Safety
1,850
stock - Beginning inventory)
Ending inventory (Beginning inventory +
450
Production requirement - Demand forecast)

Production hours required (Production

5 hours/unit 9,250
requirement x 5 hour/unit)
Working days per month 22
Hours per month per worker (Working days x 8
8 hours/day 176
hour/day)
Workers required (Production hours
53
required/Hours per month per worker)

New workers hired (assume beginning of worker =

53 workers -
53 people)
200 Dollar Hiring cost -
Worker laid off -
250 Dollar Layoff cost -
Straight-time cost (Production hours required x 4
4 Dollar 37,000
Dollar)

Workers 40
January
Beginning inventory 400
Working days per month 22
Production hours available (Working days per
8 40 7,040
month x 8 hours/day x 40 workers)
Actual production (Production hours available/ 5
5 hours/unit 1,408
hours/unit)
Demand forecast 1,800
Ending inventory (Beginning inventory + Actual
8
production - Demand forecast)
5 Dollars Shortacge cost -
Safety stock 450
 Unit excess (Ending inventory -safety stock) only if
-
positive amount
1.5 Dollar Inventory cost (unit excess x 1.5 Dollars) -
Straigt-time cost (Production hours required x 4
4 Dollar 28,160
Dollar)

Workers 25
January
Production requirement 1,850
Working days per month 22
Production hours available (working days x 8
8 hours/day 4,400
hours/day x 25 workers)
Actual production (production hours available/ 5
5 hours/unit 880
hours per unit)
Unit subcontracted (Production requirement -
970
Actual production)
dollar/product
20 Subcontracting cost (units subcontracted x $20) 19,400
subcontracted
4 dollar/hour Straight-time cost (production hours available x $4) 17,600

Workers 38
January
Beginning inventory (without safety stock) 400
Working days per month 22
Production hours available (working days x 8
8 hours/day 6,688
hours/day x 38 workers)
 Regular shift production (production hours
5 hours/unit 1,338
available : 5 hours/unit)
Demand forecast 1,800
Unit availabel before overtime (beginning
inventory + regular shift production - demand -62
forecast)
Unit overtime 62
dolar/hour Overtime cost (unit overtime x 5 hours/unit x
6 1,860
(overtime cost) $6/hour)
25% Demand forecast Safety stock 450
Units excess (uniits available before overtime -
-
safety stock) only in positive amount
1.5 dolar/unit Inventory cost (unit ecessive x $1.5) -
4 dolar/hour Straight time cost (production hours available x $4) 26,752
February March April May June Total
450 375 275 225 275
1,500 1,100 900 1,100 1,600
375 275 225 275 400
1,425 1,000 850 1,150 1,725

375 275 225 275 400

7,125 5,000 4,250 5,750 8,625

19 21 21 22 20
152 168 168 176 160

47 30 26 33 54

- - - 7 21
- - - 1,400 4,200 5,600
6 17 4 - -
1,500 4,250 1,000 - - 6,750
28,500 20,000 17,000 23,000 34,500 160,000
Total Cost 172,350

February March April May June Total

8 (276) (32) 412 720
19 21 21 22 20
6,080 6,720 6,720 7,040 6,400

1,216 1,344 1,344 1,408 1,280

1,500 1,100 900 1,100 1,600
(276) (32) 412 720 400
1,380 160 - - - 1,540
375 275 225 275 400
 - - 187 445 -
- - 281 668 - 948
24,320 26,880 26,880 28,160 25,600 160,000
Total Cost 162,488

February March April May June Total

1,425 1,000 850 1,150 1,725
19 21 21 22 20
3,800 4,200 4,200 4,400 4,000

760 840 840 880 800

665 160 10 270 925

13,300 3,200 200 5,400 18,500 60,000

15,200 16,800 16,800 17,600 16,000 100,000
Total cost 160,000

February March April May June Total

- - 177 554 792
19 21 21 22 20
5,776 6,384 6,384 6,688 6,080
 1,155 1,277 1,277 1,338 1,216
1,500 1,100 900 1,100 1,600

-345 177 554 792 408

345 0 0 0 0
10,350 - - - - 12,210
375 275 225 275 400
- - 329 517 8
- - 494 776 12 1,281
23,104 25,536 25,536 26,752 24,320 152,000
Total cost 165,491