Nowjuice, Inc., produces Shakewell® fruit juice. A planner has developed an aggr
ID: 409312 • Letter: N
Question
Nowjuice, Inc., produces Shakewell® fruit juice. A planner has developed an aggregate forecast for demand (in cases) for the next six months.
Use the following information to develop aggregate plans.
Develop an aggregate plan using each of the following guidelines and compute the total cost for each plan.
Use level production. Supplement using overtime as needed. (Negative amounts should be indicated by a minus sign. Leave no cells blank - be certain to enter "0" wherever required. Omit the "$" sign in your response.)
Use a combination of overtime (500 cases per period maximum), inventory, and subcontracting (500 cases per period maximum) to handle variations in demand. (Negative amounts should be indicated by a minus sign. Leave no cells blank - be certain to enter "0" wherever required. Omit the "$" sign in your response.)
Use overtime up to 750 cases per period and inventory to handle variations in demand.(Negative amounts should be indicated by a minus sign. Leave no cells blank - be certain to enter "0" wherever required. Omit the "$" sign in your response.)
Which plan has the lowest total cost?
Nowjuice, Inc., produces Shakewell® fruit juice. A planner has developed an aggregate forecast for demand (in cases) for the next six months.
Explanation / Answer
Solution: 1
. Level production supplemented with overtime as needed.
period 1 2 3 4 5 6 Total
Forecast 4,000 4,800 5,600 7,200 6,400 5,000 33,000
Output
Regular 5,000 5,000 5,000 5,000 5,000 5,000 30,000
Overtime 1,600 1,400 3,000
Output - Forecast 1,000 200 –600 –600 0 0 0 0
Inventory Beginning 1,000 1,200 600 0 0
Ending 1,000 1,200 600 0 0 0
Average 500.0 1,100.0 900.0 300.0 0.0 0.0 2,800
Backlog 0 0 0 0 0 0 0
Costs:
Regular @ 10 50,000 50,000 50,000 50,000 50,000 50,000 300,000
Overtime @ 16 0 0 0 25,600 22,400 0 48,000
Inventory @ 1 500 1,100 900 300 0 0 2,800
Back orders @ 10 0 0 0 0 0 0 0
Total 50,500 51,100 50,900 75,900 72,400 50,000 350,800
2.
Period 1 2 3 4 5 6 Total
Forecast 4,000 4,800 5,600 7,200 6,400 5,000 33,000
Output Regular 5,000 5,000 5,000 5,000 5,000 5,000 30,000
Overtime 500 500 500 500 500 2,500
Subcontract 500 500
Output - Forecast 1,500 700 –100 –1,700 –400 0 0
Inventory Beginning 1,500 2,200 2,100 400 0
Ending 1,500 2,200 2,100 400 0 0
Average 750.0 1,850.0 2,150.0 1,250.0 200.0 0.0 6,200
Backlog 0 0 0 0 0 0 0
Costs: Regular @ 10 50,000 50,000 50,000 50,000 50,000 50,000 300,000
Overtime @ 16 8,000 8,000 8,000 8,000 8,000 0 40,000
Subcontract @ 20 0 0 0 0 10,000 0 10,000
Inventory @ 1 750 1,850 2,150 1,250 200 0 6,200
Back orders @ 10 0 0 0 0 0 0 0
Total 58,750 59,850 60,150 59,250 68,200 50,000 356,200
3.
Period 1 2 3 4 5 6 Total
Forecast 4,000 4,800 5,600 7,200 6,400 5,000 33,000
Output Regular 5,000 5,000 5,000 5,000 5,000 5,000 30,000
Overtime 750 750 750 750 3,000
Output - Forecast 1,000 950 150 –1,450 –650 0 0
Inventory Beginning 1,000 1,950 2,100 650 0
Ending 1,000 1,950 2,100 650 0 0
Average 500 1,475 2,025 1,375 325 0.0 5 ,700
Backlog 0 0 0 0 0 0 0
Costs: Regular @ 10 50,000 50,000 50,000 50,000 50,000 50,000 300,000
Overtime @ 16 0 12,000 12,000 12,000 12,000 0 48,000
hire/layoff 0
Inventory @ 1 500 1,475 2,025 1,375 325 0 5,700
Back orders @ 10 0 0 0 0 0 0 0
Total 50,500 63,475 64,025 63,375 62,325 50,000 353,700
We should choose the plan generated in part 1, because $350,800 < 353,700 < 356,200.
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