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Essay / Research Paper Abstract
This 7 page paper is based on a case study supplied by the student. A company has seasonal demand and wants to assess the best production strategy, The paper explains the way this can be calculated and shows the calculation for a level and a change strategy. The bibliography cites 3 sources.
Page Count:
7 pages (~225 words per page)
File: TS14_TElevelcost.rtf
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Unformatted sample text from the term paper:
make the decision to stabilise the production so that when times are quieter the level of production is higher than the demand and the goods can then be placed into
inventory. Where the demand is higher than the production capacity it can then be satisfied without the need to increase staffing. However this can also increase the working capital and
the costs of holding stock. Not only with the facilities, but some goods may also be more prone to spoiling if they are held (Chadwick, 2003). The alterative may
be to adjust the production to match the demand; a chase strategy. This is more responsive but makes planning more difficult. The last option is to contract out the additional
capacity. To start with we need to assess the level of production costs that are currently in place. We are told the current capacity can produce 500 units a
month and that each employee can produce 20 at a cost of 1,000. This means the labour cost per unit is 50 and 75 if there is the need for
over time, this gives us the basic variable cost per unit at follows Labour cost per unit 50 Variable cost 30 Costs 80 If overtime is needed Additional overtime payment
25 Cost using overtime 105 The total production using overtime is limited to 550, as there is a 10% limit. However, the demand is greater than this so we need
to look a the changes that can be made and how much these will cost. The first consideration is to look at the stock pattern that will be seen
where there is stable production to ensure the opening stock will be enough to support the company over the year. Although it is possible to calculate there is the need
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