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# The total inventory holding cost for the plan

9.A company has the following forecast demand for the next six months:

Month 1 2 3 4 5 6
Demand 300 300 400 300 300 400

The following information is also available.

Workdays/month = 20
Labor hours/unit = 16
Working time/day = 8

The firm must plan production for the next six months. If a level production rate of 500 is used, then which of the following is the maximum ending inventory level experienced during any month of the six months?

A. 300

B. 400

C. 500

D. 900

E. 1000
Consider the data of Question 9. Now suppose that inventory, stockouts, overtime, and subcontracting are not allowed. Only hiring and layoff are allowed to respond to fluctuations in demand. Currently there are 20 workers on the payroll and each worker produces 10 units per month. The following information is also available.
Hiring cost/worker = \$100
Layoff cost/worker = \$200

The total cost of hiring and layoff during the six-month period will be:

A. \$1,000

B. \$2,000

C. \$3,000

D. \$4,000

E. \$5,000

Question 11 of 13 5.0 Points
You must submit the work in Assignments to earn credit for this problem.
The following table gives the demand and production plan for an organization.
January February March
Demand 900 900 1,500
Production plan 1,100 1,100 1,100
The initial inventory is zero. The inventory holding cost is \$2 per unit per month. The total inventory holding cost for the plan is:

A. \$600

B. \$800

C. \$1,200

D. \$1,600

E. None of the above

Question 13 of 13 6.0 Points
Monthly demand for a product has been as follows in the last 2 months.
July 55 units
August 61

What is the forecast for September using exponential smoothing with alpha = 0.2 if the forecast for July was 50 units?

A. 49

B. 50

C. 51

D. 52

E. 53

#### Solution Summary

The total inventory holding cost for the plan is assessed.

\$2.19