Production plan prepared for the upcoming fiscal year


Question: Lawn King produces a couple models of push lawn mowers. A total of 60 workers are currently employed to work on the assembly line. Hiring cost is $800 for each new employee, while the cost of laying off an employee is $1200. The production strategy in current use is a one-shift-per-day level strategy at average demand. Differences between demand and production are balanced by inventory and backorders. If a backorder occurs, the order is filled from the next available production run and safety stock is consumed if needed and replenished later. Lawn King utilizes a $7/unit carrying cost per month for inventory, and backorders have a cost of $10/unit per month. Production is estimated at 5 mowers per worker per shift, and the assembly line operates 20 working days (shifts) per month. Lawn King keeps 500 mowers as safety stock, which will be the beginning inventory for September. The regular time cost of production is $50 per lawn mower. [Hint: production = (# of workers)( # of mowers each worker produces per shift)(# of shifts per month)] Each May an aggregate production plan is prepared for the upcoming fiscal year that starts in September. The aggregate plan is used for

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Other Management: Production plan prepared for the upcoming fiscal year
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