The table below shows the aggregate sales forecasts for a product family for the year...
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Accounting
The table below shows the aggregate sales forecasts for a product family for the year along with the number of working days per month. The following assumptions are made:
Cost of a unit is $30.
Number of units produced per employee per day is 3.
Hiring cost per employee is $200.
Firing cost per employee is $500.
Inventory carrying cost per unit per month is 2%.
Shortage cost per unit is $50.
Beginning inventory is 115, and ending inventory is 100.
Beginning labor force is 10.
If number of workers needed has fractions, then always round up.
Month
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Forecast
253
280
340
300
393
233
287
420
480
427
527
393
Days/Month
20
21
23
20
22
22
10
23
20
22
20
20
Develop a level production plan and a chase production plan, and compare the costs of the two plans. Note, you should plan to reach the ending inventory of 100 by the end of January.
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