Question

Poseidon Meter, Inc., makes a variety of water meters. Data for the past year indicate a worker can make, on average, 100 meters per four-week period. The forecast for the next four periods is 1200, 1200, 1000, and 1000 meters, respectively.Beginning inventory 0 unitsInitial workforce size 10 workersProduction and costsWages $1,500/worker/periodInventory $1/meter/period (based on average inventory during each period)Back order $2/meter/period (based on back orders at end of period)Hiring $1,000/workerLayoff $2,000/workerDevelop a constant work force plan for the next four periods. Summarize the plan, its costs, and its consequences.

Answer 1

Answer:

Poseidon Meters

Production Plan (with constant workforce)

For periods 1, 2, 3 and 4

                                                                          Periods                                

                                                     1                 2                 3               4

Beginning inventory                    0                0                0               0

Production requirement          1,200        1,200          1,000         1,000

Actual production                     1,100         1,100           1,100          1,100

Ending inventory                         0                0                0                0

Employees                                  11                11                11                11

Wages                                   $16,500     $16,500    $16,500    $16,500  

Hiring/layoff costs                  $1,000              $0             $0             $0

Back orders (in units)                100             200           100             0            

Back order costs                   $2,000      $4,000      $2,000            $0

Holding costs                                $0              $0             $0             $0

Total costs                            $19,500    $20,500    $18,500    $16,500