Q51473 Using the given data except modify as follows: Monthly demand and number of workdays per month are as shown below, employees work 8 hours per day, and time to produce one unit is 40 hours. Regular-time cost is (Rs.30 per hour) (40 hours per unit) = Rs.1,200 per unit, and subcontract time cost is (Rs.50 per hour) (40 hours per unit) = Rs.2,000 per unit. Produce with a (minimal) constant work force of six workers on regular time and subcontract to meet additional requirements.

  Forecast demand Cumulative demand Safety stock @20 per cent forecast Beginning inventory Production requirement (fest. + SS – beg. inv.)
January 300 300 60 50 300 + 60 – 50 = 310
February 500 800 100 60 500 + 100 – 60 = 540
March 400 1,200 80 100 400 + 80 – 100 = 380
April 100 1,300 20 80 100 + 20 – 80 = 40
May 200 1,500 40 20 200 + 40 – 20 = 220
June 300 1,800 60 40 300 + 60 – 40 = 320
Table No. 1

Solution:

Table No. 2

(1) Month Jan. Feb. Mar. April May June July Aug. Sept. Total
(2) Forecast 40 25 55 30 30 50 30 60 40 360
(3) Workdays/mo 22 18 21 22 22 20 21 22 20  
(4) Prod. hr avail. =[3](6 wkrs)
(8 hr)		   1056   864   1008   1056   1056   960   1008   1056   960  
(5) Reg.-time prod. [4] 740
hr/unit		 26.4 21.6 25.2 26.4 26.4 24.0 25.2 26.4 24.0  
(6) Units subcon’t (2)-(3) 13.6 3.4 29.8 3.6 3.6 26.0 4.8 33.6 16.0  
(7) Subcon’t cost (6)
(Rs.2,000)		 27,200 6,800 59,600 7,200 7,200 52,000 9,600 67,200 32.000 268,800
(8) Reg.-time cost(5)
(Rs.1,200)		 31,680 25,920 30,240 31,680 31,680 28,800 30,240 31,680 28,800 270,720

The total cost of this plan is Rs. 268,800 + Rs. 270,720 = Rs. 539,520.

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