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

To calculate the required quarterly output for a level production strategy, we need to first calculate the total number of workers required:
Total Workforce = Beginning Workforce = 35 workers

Next, we can calculate the total quarterly production:
Total Production = Total Workforce * Production per Employee
Total Production = 35 workers * 1,250 units per quarter
Total Production = 43,750 units per quarter

Since we are using a level production strategy, the required quarterly output will be the same as the total quarterly production:
Required Quarterly Output = Total Quarterly Production
Required Quarterly Output = 43,750 units per quarter

Therefore, the best choice is C: 93,750 units per quarter.

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