please answer question 1 by showing all work The EGAD Bottling Company has decid

Question

please answer question 1 by showing all work

The EGAD Bottling Company has decided to introduce a new line of Backordering cost premium bottled water that will include several "designer" flavors. Beginning inventory Marketing manager Georgianna Mercer is predicting an upturn in demand based on the new offerings and the increased public aware- Among the strategies being considered are the following ness of the health benefits of drinking more water. She has prepared aggregate forecasts for the next six months, as shown in the following overtime. table (quantities are in tankloads) Backlogs are not aloned 0 tankloads 1. Level production supplemented by up to 10 tankloads a mort to 2. A combination of overtime, inventory, and subcontracting Regui 3. Using overtime for up to 15 tankloads a month, along wih inet production should be the same each month. Month May Jun Jul Aug Sept Oct Total Forecast 50 60 70 90 80 70 420 to handle variations. Regular production should be the same eac Production manager Mark Mercer (no relation to Georgianna) has devel- month. oped the following information. (Costs are in thousands of dollars.) Question:s Regular production cost Regular production capacity Overtime production cost Subcontracting cost Holding cost 1. The objective is to choose the plan that has the lowest cost hic S1 per tankload 60 tankloads $1.6 per tankload $1.8 per tankload $2 per tankload per month plan would you recommend? 2. Presumably, information about the new line has been shared wt supply chain partners. Explain what information should te sast with various partners, and why sharing that information s iport

Explanation / Answer

Plan 2 by using Regular production, Overtime, inventory and subcontracting is recommended as it has lowest cost among three plans   

Total Cost of Plan-1 (Using Regular production and upto 10 tankloads of overtime per month) Month May June July August September October Total Forecast 50 60 70 90 80 70 420 Beginning Inventory 0 20 30 30 10 0 90 Regular Production 60 60 60 60 60 60 360 Overtime Production 10 10 10 10 10 10 60 Subcontracting 0 0 0 0 0 0 0 Total Production 70 70 70 70 70 70 420 Ending Inventory 20 30 30 10 0 0 90 Cost: Regular Production cost ($1 per Tankload) $60 $60 $60 $60 $60 $60 $360 Overtime Production cost ($1.6 per Tankload) $16 $16 $16 $16 $16 $16 $96 Subcontracting cost ($1.8 per Tankload) $0 $0 $0 $0 $0 $0 $0 Inventory holding cost ($2 per Tankload/month) $40 $60 $60 $20 $0 $0 $180 Total Cost (Per Month) $116 $136 $136 $96 $76 $76 $636 Total Cost of Plan-2 (Using Regular production, Overtime and subcontracting) Month May June July August September October Total Forecast 50 60 70 90 80 70 420 Beginning Inventory 0 10 10 0 0 0 20 Regular Production 60 60 60 60 60 60 360 Overtime Production 0 0 0 10 10 10 30 Subcontracting 0 0 0 20 10 0 30 Total Production 60 60 60 90 80 70 420 Ending Inventory 10 10 0 0 0 0 20 Cost: Regular Production cost ($1 per Tankload) $60 $60 $60 $60 $60 $60 $360 Overtime Production cost ($1.6 per Tankload) $0 $0 $0 $16 $16 $16 $48 Subcontracting cost ($1.8 per Tankload) $0 $0 $0 $36 $18 $0 $54 Inventory holding cost ($2 per Tankload/month) $20 $20 $0 $0 $0 $0 $40 Total Cost (Per Month) $80 $80 $60 $112 $94 $76 $502 Note: For Plan 2 assumed that overtime is upto 10 tankloads as no information given on this Total Cost of Plan-3 (Using Regular production and upto 15 tankloads of overtime per month) Month May June July August September October Total Forecast 50 60 70 90 80 70 420 Beginning Inventory 0 10 15 20 5 0 50 Regular Production 60 60 60 60 60 60 360 Overtime Production 0 5 15 15 15 10 60 Subcontracting 0 0 0 0 0 0 0 Total Production 60 65 75 75 75 70 420 Ending Inventory 10 15 20 5 0 0 50 Cost: Regular Production cost ($1 per Tankload) $60 $60 $60 $60 $60 $60 $360 Overtime Production cost ($1.6 per Tankload) $0 $8 $24 $24 $24 $16 $96 Subcontracting cost ($1.8 per Tankload) $0 $0 $0 $0 $0 $0 $0 Inventory holding cost ($2 per Tankload/month) $20 $30 $40 $10 $0 $0 $100 Total Cost (Per Month) $80 $98 $124 $94 $84 $76 $556

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