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Q1. XYZ Company Has The Following Aggregate Demand and Cost Information For The Upcoming Four
Q1. XYZ Company Has The Following Aggregate Demand and Cost Information For The Upcoming Four
Q1. XYZ Company has the following aggregate demand and cost information for the upcoming four
quarters.
Solution
1. Plan A—Chase demand by hiring and firing
Note that in chase demand strategy capacity (production) in each time period
is varied to exactly match the forecasted aggregate demand in that time period.
Quarter Demand Capacity Production hiring cost Firing costs Total cost
(Production) cost (cost of (cost of
increasing decreasing
production) Production)
Note
- * (100 x 40) = production output Quarter 1 =1,400 units
Description
cost
Note
- *(125x 40) = production output Quarter 1 =1,425 units
Previous quarter’s output = 1,300 units
Production increase Q1 = 125 units
Cost of hiring additional workers for the increase in production level = birr 40 per unit
Cost of production increase (hiring cost) = 125 x 40 = 5,000
3. Plan C—1350 units level - using inventory and subcontracting to meet uneven
demand
- Note that the regular work force will be adjusted at the beginning of the first quarter.
1. 1350 1400 - 50
2. 1350 1200 150 -
3. 1350 1600 - 100
4. 1350 1500 - 150
Total 5400 5700 150 300
Description cost
Q2. The MPS calls for 110 units of Product M. There are currently 30 of Product M on hand.
Each M requires 4 of Component N. There are 20 units of N on hand. Determine the
following
A. Net requirements for M
B. Gross requirements for N
C. Net requirements for N.
Solution
E = 40
F=0
G = 30
Solution
A. Determine the quantities of B, C, D, E, F, and G needed to assemble one A.
Part B: 2 x number of As = 2 x1 = 2
Part C: 3 x number of As = 3 x 1 = 3
Part D: 1 x number of As = 1x 1 = 1
Part E: (1 x number of Bs) + (2 x number of Ds) = (1x2) + (2x 1) = 4
Part F: 1 x number of Cs = (1 x 3 ) = 3
Part G: (1 x number of Cs) + (1 x number of Ds) = (1 x 3) + (1 x 1) = 4
B. Determine the quantities of these components that will be required to assemble 40
units of A, assuming no inventories on hand for A and its components parts