Caster gourd Home Products makes two types of butcher block tables: the Beefeater and the Deutschlander. The two tables are made in the same facility and use the same amount of labor and equipment. In addition, we know the following:
· Each table costs $300 to make, and each requires, on average, 3.2 hours of labor.
· Each employee works 160 hours per month, and there is no effective limit on the number of employees.
· The cost of hiring or laying off an employee is $300.
· The monthly holding cost for a table is $15.
· For planning purposes, Caster gourd will begin and end with 20 employees and 0 tables in inventory.
a. (***) Develop a top-down level production plan for Caster gourd for the 10-month planning period. Calculate the total production, hiring, layoff, and inventory costs for your plan.
b. (***) Repeat Part a, except in this case develop a chase production plan.
c. (**) Suppose hiring and layoff costs increase dramatically. In general, will this make a level plan look better or worse relative to a chase plan? Explain.
MONTH
| BEEFEATER
| DEUTSCHLANDER
|
November 2005 | 650 | 3048 |
December | 676 | 2899 |
January 2006 | 624 | 3198 |
February | 624 | 2671 |
March | 696 | 2919 |
April | 475 | 3102 |
May | 566 | 2964 |
June | 819 | 2409 |
July | 754 | 3381 |
August | 982 | 3965 |
Forecasted sales for the tables are as follows:
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