January February

Demand forecast 1800 1500

No of working days 22 19

Costs units
Materials 100 $/unit
Inventory holding cost 1.5 $/unit/month
Marginal cost of stock-out 5 $/unit/month
Marginal cost of subcontracting 20 $/unit ($120 subcontracting cost -
Hiring and training cost 200 $/worker
Layoff cost 250 $/worker
Labor hours required 5 hours/unit
Straight time cost (1st 8 hrs each day) 4 $/hour
Overtime cost (time and a half) 6 $/hour

Inventory
Beginning inventory 400 units
Safety stock 25% of month demand
 March April May June Total
1100 900 1100 1600 8000
21 21 22 20 125

($120 subcontracting cost - $100 material cost)

nth demand
 January February March
Beginning Inventory Level 400 450 375
Demand Forecast 1800 1500 1100
Safety Stock 450 375 275
Production Requirement 1850 1425 1000
Ending Inventory 450 375 275

Production Hours Required 9250 7125 5000

No of days of Work /Month 22 19 21
Man Hours/worker/month 176 152 168
work force required 53 47 30

Workers Hired 0 0 0
Workers Fired 0 6 17
Hiring Cost 0 0 0
Firing Cost 0 1500 4250
Production Cost 37000 28500 20000

Total Cost from Chase Stra

 April May June
275 225 275
900 1100 1600
225 275 400
850 1150 1725
225 275 400

4250 5750 8625

21 22 20
168 176 160
26 33 54

0 7 21
4 0 0
0 1400 4200 5600
1000 0 0 6750
17000 23000 34500 160000

Total Cost from Chase Strategy 172350

 Jan Feb march April
Beginning Inventory 400 8 -276 -32
Constant Work force 40 40 40 40
No of Working Days 22 19 21 21
Production hours/month 7040 6080 6720 6720
Actual production 1408 1216 1344 1344

Demand Forecast 1800 1500 1100 900

Ending Inventory 8 -276 -32 412
Safety Stock 450 375 275 225

No of Backorders 0 276 32 0
Excess Inventory 0 0 0 187
Backorder Cost 0 1380 160 0
Inventory Cost 0 0 0 280.5
Production Cost 28160 24320 26880 26880

Total Cost of Constant workforce =

 May June
412 720
40 40
22 20
7040 6400
1408 1280

1100 1600
720 400
275 400

0 0
445 0
0 0 1540
667.5 0 948
28160 25600 160000

tant workforce = 162488

 Jan Feb
Beginning Inventory 400 450
Demand Forecast 1800 1500
Safety Stock 450 375
Production Requirement 1850 1425
Ending Inventory 450 375

Constant Workforce 26 26
No of working Days 22 19
Total production Hours 4576 3952

IN House Production 915 790

Units Subcontracted 935 635
Inhouse Production Cost 18304 15808
Subcontracting Cost 18700 12700

Total CF+SubContracting C
 Marc April May June
375 275 225 275
1100 900 1100 1600
275 225 275 400
1000 850 1150 1725
275 225 275 400

26 26 26 26
21 21 22 20
4368 4368 4576 4160

874 874 915 832

126 0 235 893
17472 17472 18304 16640 104000
2520 0 4700 17860 56480

otal CF+SubContracting Cost 160480

 Jan Feb

Beg inv 400 0

Working Days Per month 22 19
No of Workers 38 38
Production Hours Availabel 6688 5776
Regular Time Production 1337.6 1155.2
Regular Time Production Cost 26752 23104

Demand Forecast 1800 1500

Units Available before Overtime -62.4 -344.8
Overtime Production 62.4 344.8
Overtime Production Cost 1872 10344

Safety Stock 450 375

Excess Inventory 0 0
Inventory Holding Cost 0 0
Mar Apr May Jun

0 176.8 553.6 791.2

21 21 22 20
38 38 38 38
6384 6384 6688 6080
1276.8 1276.8 1337.6 1216
25536 25536 26752 24320 152000

1100 900 1100 1600

176.8 553.6 791.2 407.2
0 0 0 0
0 0 0 0 12216

275 225 275 400

0 328.6 516.2 7.2
0 492.9 774.3 10.8 1278

Total Costs involved 165494

Items 9
A 1250
B 470
Subassembly D 270
 Master Production Schedule
week
10 11 12 13 14 15 16 17 18 19
850 550
360 560
250 320
20
Cost/ite 10 Order Co 47 Holding C 0.05

Lot For Lot

Week Net RequproductioEnding InHolding cSet up CoTotal Cost
1 50 50 0 0 47 47
2 60 60 0 0 47 94
3 70 70 0 0 47 141
4 60 60 0 0 47 188
5 95 95 0 0 47 235
6 75 75 0 0 47 282
7 60 60 0 0 47 329
8 55 55 0 0 47 376

EOQ
Annual 3412.5 Units Holding C 2.6 2.6 Set Up Co

EOQ 351.248 351

Week Net RequProductioEnding InHolding CSetUp CoTotal Cost

1 50 351 301 15.05 47 62.05
2 60 0 241 12.05 74.1
3 70 0 171 8.55 82.65
4 60 0 111 5.55 88.2
5 95 0 16 0.8 89
6 75 351 276 13.8 47 149.8
7 60 216 10.8 160.6
8 55 161 8.05 168.65

Least Total Cost

Start WeEnding WQuantityInventor Carrying Order CoTotal Cost

1 1 50 0 0 47 47
1 2 110 60 3 47 50
1 3 180 200 10 47 57
1 4 240 380 19 47 66
1 5 335 760 38 47 85
1 6 410 1135 56.75 47 103.75
1 7 470 1495 74.75 47 121.75
1 8 525 1880 94 47 141

Least Total Cost

Start WeEnding WQuantityInventor Carrying Order CoTotal Cos

1 1 50 0 0 47 47
1 2 110 60 3 47 50
1 3 180 200 10 47 57
1 4 240 380 19 47 66
1 5 335 760 38 47 85
1 6 410 1135 56.75 47 103.75
1 7 470 1495 74.75 47 121.75
1 8 525 1880 94 47 141
47
UnitCost
0.94
0.45455
0.31667
0.275
0.25373
0.25305
0.25904
0.26857