r (1) A company has estimated monthly demand for the forthcoming year. Recommend
ID: 1126265 • Letter: R
Question
r
(1) A company has estimated monthly demand for the forthcoming year.
Recommend an aggregate production plan for a company if the capacity and costs parameters of production are:
(1) Regular capacity of 450 units per month at production cost of $40 per unit.
(2) Overtime for excess requirements at an additional cost of $25 per unit up to a maximum of 100 units.
(3) Subcontract at an additional cost of $30 per unit with maximum of 150 units per month.
(4) Inventory carrying cost is $20 per unit-month. Assume beginning inventory of 250 units and the required ending inventory of 50 units. Show the effect of these inventories to the forecast numbers given in the table.
Optional: What is the total cost of your plan?
Month
Forecast
Quantities
Costs
Regular
Prod.
OT
Prod.
Inv.
Subcontract Qty.
Regular
Prod.
Cost
OT Cost
Inv. Cost
Subcontract Cost
1
400
2
400
3
800
4
600
5
800
6
600
7
300
8
400
9
700
10
800
11
800
12
600
Total
Month
Forecast
Quantities
Costs
Regular
Prod.
OT
Prod.
Inv.
Subcontract Qty.
Regular
Prod.
Cost
OT Cost
Inv. Cost
Subcontract Cost
1
400
2
400
3
800
4
600
5
800
6
600
7
300
8
400
9
700
10
800
11
800
12
600
Total
Explanation / Answer
Total
Total Cost is $320250
Month Forecast Quantities Costs Regular OT Inv. Subcontract Qty. Regular OT Cost Inv. Cost Subcontract Cost Prod. Prod. Prod. Cost 1 400 450 300 18000 6000 2 400 450 350 18000 7000 3 800 450 0 18000 4 600 450 100 0 50 18000 6500 3500 5 800 450 100 0 150 18000 6500 10500 6 600 450 100 0 50 18000 6500 3500 7 300 450 150 18000 3000 8 400 450 200 18000 4000 9 700 450 50 0 18000 3250 10 800 450 100 0 150 18000 6500 10500 11 800 450 100 0 150 18000 6500 10500 12 600 450 100 50 18000 6500 3500Total
Total Cost is $320250
216000 42250 20000 42000 320250Related Questions
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