4) A manufacturer of industrial seafood processing equipment wants you to develo

Question

4) A manufacturer of industrial seafood processing equipment wants you to develop an aggregate plan for the four quarters of the upcoming year using the following data on demand and capacity.

4) A manufacturer of industrial seafood processing equipment wants you to develop an aggregate plan for the four quarters of the upcoming year using the following data on demand and capacity.

Units Regular Time Over- Sub- Initial inventory Regular time cost 250 $         1.25 time contract 1 200.00 400.00 80.00 100.00 Overtime cost $         1.50 2 750.00 400.00 80.00 100.00 Subcontracting cost $         2.00 3 1200.00 800.00 160.00 100.00 Holding cost $         0.50 4 450.00 400.00 80.00 100.00 No back ordering is allowed A.    $3,760 B.    $3,360 C.   $4,120 D.   $3,740 E.    $4,000

Explanation / Answer

Total cost of the plan is $3,360.

Therefore option B is the correct answer.

Period 1 2 3 4 Total Forecast 200 750 1,200 450 2600 Beginning Inventory 250 410 140 0 800 Regular Production 360 400 800 400 1960 Overtime Production 0 80 160 50 290 Subcontracting 0 0 100 0 100 Total Production (Regular + Overtime + Subcontracting) 360 480 1060 450 2350 Ending Inventory 410 140 0 0 550 Ending Backorders 0 0 0 0 0 Cost Regular Production (at $1.25) $450.00 $500.00 $1,000.00 $500.00 $2,450.00 Overtime Production (At $1.50) $0.00 $120.00 $240.00 $75.00 $435.00 Subcontracting (at $2) $0.00 $0.00 $200.00 $0.00 $200.00 Holding cost (At $0.5/unit) $205.00 $70.00 $0.00 $0.00 $275.00 Total Cost $655.00 $690.00 $1,440.00 $575.00 $3,360.00

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