(1) A company has estimated monthly demand for the forthcoming year Recommend an
ID: 382906 • Letter: #
Question
(1) A company has estimated monthly demand for the forthcoming year Recommend an aggregate production plan tor 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 S30 per unit with maximum of 150 units per month. (4) Inventory carrying cost is S20 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 OT Inv. SubcontRegular OT Inv. Subcont Prod.Prod. ract Qty. Prod. Cost Cost ract Cost Cost 2 3 400 800 600 800 600 300 6 700 800 800 600 10 12 TotalExplanation / Answer
To fill the table, we follow the following steps:
Start with producing 450 in Regular Time
If demand is more, we produce in Overtime
If still demand is left, we produce in Subcontract as well
Leftover is placed in inventory
Cost side is filled as:
Regular production = $40/unit
OT production = $65/unit
Subcontract production = $70/unit
Inventory Cost = $20/unit
Total cost of the plan is : 216,000 + 42,250 + 20,000 + 42,000 = $320,250
Month Forecast Reg Prod. OT Prod. Inv SC Qty RegProd Cost OTProd Cost Inv Cost SC 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 3500 Total 216,000 42,250 20,000 42,000Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.