Appliances Inc. is preparing an aggregate production plan for washers for the next four months. The company's expected monthly demand is given below in the chart. The company will have 500 washers 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 5 $300
Inventory carrying cost per month per unit 5 $50 (based on ending month inventory) Hiring cost per worker 5$1,000
Firing cost per worker 5 $2,000 Beginning number of workers 5 10
Each worker can produce 100 units per month.
|
Month
|
Demand
|
Regular
Production
|
Ending
Inventory
|
Workers
Required
|
Hire
|
Fire
|
|
1
|
4,000
|
|
|
|
|
|
|
2
|
6,000
|
|
|
|
|
|
|
3
|
3,000
|
|
|
|
|
|
|
4
|
7,000
|
|
|
|
|
|
|
Total
|
20,000
|
|
|
|
|
|
|
Chase Plan
|
|
Month
|
Demand
|
Regular Production
|
Ending Inventory
|
Workers Required
|
Hire
|
Fire
|
|
1
|
4,000
|
|
|
|
|
|
|
2
|
6,000
|
|
|
|
|
|
|
3
|
3,000
|
|
|
|
|
|
|
4
|
7,000
|
|
|
|
|
|
|
Total
|
20,000
|
|
|
|
|
|
Complete the tables and determine the cost of the two plans.