This article discusses the optimal production schedule for a business in Logistics & Supply, including labor hours, hiring and firing costs, and total production costs. It also includes a chart showing the relationship between labor costs and the number of employees.
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Running head: LOGISTICS & SUPPLY Logistics & Supply Name of the Student: Name of the University: Author’s Note:
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2LOGISTICS & SUPPLY Requirement 1: It is assumed that the production for Month 1, Month 2, Month 2 and Month 4 are X1, X2, X3 and X4 respectively and Z is total production cost for 4 months. On the basis of this assumption, the Linear Programming Model to derive the optimal production level, which would incur minimum cost, is developed below: a)Total Nos. of Workers required: Y1 = [4X1 – {20x(160+20)}]/(160+20) + 20 Y2 = [4X2 – {Y1x(160+20)}]/(160+20) Y3 = [4X3 – {Y2x(160+20)}]/(160+20) Y4 = [4X4 – {Y3x(160+20)}]/(160+20) b)Closing Inventory: S1 = X1 + 500 – 3000 S2 = X2 + S1 – 5000 S3 = X3 + S2 – 2000 S4 = X4 + S3 – 1000 c)Optimum Production Schedule: Minimize Z= [15X1 + 1500Y1 + (Y1x20x13) + 1600(Y1-20) + 2000(20-Y1) + 3S1] +
4LOGISTICS & SUPPLY (Y1-Y2)>=0 (Y2 -Y3)>=0 (Y3 -Y4)>=0 Requirement 2: Optimal Production Schedule: ParticularsMonth 1Month 2Month 3Month 4 Monthlyroducti onP3750375020001000 Addpening Stock: O500125000 4250500020001000 ess Closing StockL:1250000 Monthly Demand3000500020001000 Total Labour Hours & Workers Required: ParticularsMonth 1Month 2Month 3Month 4 Total Labour Hours Required150001500080004000 os of nitialorkersN.IW20838344 Standardorkingrs perorkerWH.W160160160160 Ma imumverti me perorkerxOW20202020 Total Labour Hours available initially360015000150008000 os oforkers to beiredN.WH63000 os oforkers to beiredN.WF003922 Total Standard Working Hours133331333371113556 otalverti meTO16671667889444 Total Labour Hours150001500080004000
5LOGISTICS & SUPPLY Minimum Production Cost: ParticularsMonth 1Month 2Month 3Month 4TOTAL Raw Material Cost$56,250$56,250$30,000$15,000$1,57,500 abor Cost for StandardorkingrsLWH.$1,25,000$1,25,000$66,667$33,333$3,50,000 abor Cost forverti meLO$21,667$21,667$11,556$5,778$60,667 Cost ofiringH$1,01,333$0$0$0$1,01,333 Cost ofiringF$0$0$77,778$44,444$1,22,222 olding Cost for Closing nventoryHI$3,750$0$0$0$3,750 TOTAL PRODUCTION COST$3,08,000$2,02,917$1,86,000$98,556$7,95,472 As per the above tables which is shown, the optimum cost is being computed for a business. The monthly production for the first month is shown to be 3750 units and there is a closing stock of 1250 units in the first month. In order to achieve this production, new employees are to be hired which increased the hiring costs of the business which is shown to be $ 1,01,333. The number of employees which are hired by the business are 63 and the labour hours required for the 1stmonth is shown to be 15000 hours. In order to achieve the required labour hours, the employees also have to work on an overtime basis(Erikssonet al.2015). In the second month the monthly demand for the product increases and the same is shown to be 5000 units. The management does not maintain any closing inventory from second month onwards due to the additional holding costs which the business will incur if closing stocks are maintained. In the third month, there is significant fall in demand which is shown to be 2000. In order to remain profitable, the management is following cost reduction strategy for which the management is firing employees which is shown to be 39 for the month. The firing of employees also requires a cost which the management has minimized by firing employees on a gradual basis. The total production cost for the business is shown to be maximum in the first month and
6LOGISTICS & SUPPLY by the fourth month the cost was significantly reduced. The total production is shown to be $ 7,95,472 in the table which is shown above. Requirement 3: 091 82 73 64 55 46 37 28 19 09 91 0 81 1 71 2 61 3 51 4 41 5 31 6 21 7 11 8 01 8 91 9 8 $0 $100,000 $200,000 $300,000 $400,000 $500,000 $600,000 $700,000 $800,000 $900,000 $1,000,000 Total Cost vs. Nos. of Initi al Workers The number of employees of the business also affects the total costs of the business as the hiring costs of the business will result in high cost of the business. The costs of the business will affect the profit generating capabilities of the business(McTernan, Dollard and LaMontagne 2013). In order to get a minimum cost for the labour costs of the business, this analysis is undertaken. The above chart shows different costs of the business due to number of labourers applied by the business in work process. The above chart reveals that the minimum number of labours which is shown to be 83 for which the respective costs which the business will incurring is shown to be $ 694,672 which is the lowest cost. In other words, the management can recruit and retain 83 labourer for the purpose of ensuring that minimum cost is incurred in the process.
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7LOGISTICS & SUPPLY Reference Eriksson, K., Johanson, J., Majkgård, A. and Sharma, D.D., 2015. Experiential knowledge and costintheinternationalizationprocess.InKnowledge,NetworksandPower(pp.41-63). Palgrave Macmillan, London. McTernan, W.P., Dollard, M.F. and LaMontagne, A.D., 2013. Depression in the workplace: An economic cost analysis of depression-related productivity loss attributable to job strain and bullying.Work & Stress,27(4), pp.321-338.