Suppose XYZ Company has the following aggregate demand requirements and other data for the upcoming four quarters. Quarter Demand Other Data 1 1300 Previous quarter’s output 1500 Units 2 1400 Beginning Inventory 200 units 3 1500 Stock out cost 50$ per unit 4 1300 Inventory holding cost 10 $ per unit Hiring Workers 4$ per unit Firing workers 8$ per unit Unit Cost 30$ per unit Overtime 40 $ per unit
Suppose XYZ Company has the following aggregate demand requirements and other data for the upcoming four quarters. Quarter Demand Other Data 1 1300 Previous quarter’s output 1500 Units 2 1400 Beginning Inventory 200 units 3 1500 Stock out cost 50$ per unit 4 1300 Inventory holding cost 10 $ per unit Hiring Workers 4$ per unit Firing workers 8$ per unit Unit Cost 30$ per unit Overtime 40 $ per unit
Chapter19: Pricing Concepts
Section: Chapter Questions
Problem 6DRQ
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Question
- Suppose XYZ Company has the following aggregate demand requirements and other data for the upcoming four quarters.
Quarter |
Demand |
Other Data |
|
1 |
1300 |
Previous quarter’s output |
1500 Units |
2 |
1400 |
Beginning Inventory |
200 units |
3 |
1500 |
Stock out cost |
50$ per unit |
4 |
1300 |
Inventory holding cost |
10 $ per unit |
Hiring Workers |
4$ per unit |
||
Firing workers |
8$ per unit |
||
Unit Cost |
30$ per unit |
||
Overtime |
40 $ per unit |
Question: Which of the following production plans is better:
–Plan A—chase demand by hiring and firing
–Plan B—produce at a constant rate of 1200 and obtain the remainder from overtime?
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