The following information relates to a company's aggregate production planning activities:

Beginning Workforce = 35 workers
Production per Employee = 1,250 units per quarter
Hiring Cost = $500 per worker
Firing Cost = $1,000 per worker
Inventory Carrying Cost = $20 per unit per quarter
If a level production strategy is used then the required quarterly output is
A)75,000
B)87,350
C)93,750
D)125,000

Question

The following information relates to a company's aggregate production planning activities:

Beginning Workforce = 35 workers
Production per Employee = 1,250 units per quarter
Hiring Cost = $500 per worker
Firing Cost = $1,000 per worker
Inventory Carrying Cost = $20 per unit per quarter
If a level production strategy is used then the required quarterly output is
A)75,000 
B)87,350 
C)93,750 
D)125,000

Quizplus · Accepted Answer

For level production strategy, the company will maintain a constant workforce of 35 workers.
Production per quarter = Production per Employee x Number of Employees 
= 1,250 units per quarter x 35 workers 
= 43,750 units per quarter.
The required quarterly output is the same as the production per quarter, which is 43,750 units.
Therefore, the correct answer is C.

The Following Information Relates to a Company's Aggregate Production Planning