You would like to construct an aggregate production plan for product X341 for th
ID: 444571 • Letter: Y
Question
You would like to construct an aggregate production plan for product X341 for the next four quarters.
Cost of regular production = 80 $/u
Cost of overtime production = 120 $/u
Inventory holding cost = 12 $/u/qtr
Cost of increasing production = 90 $/u
Cost of decreasing production = 140 $/u
Subcontracting cost = 135 $/u
Stockout cost = 150 $/u
Previous quarter's regular output = 1100 u
Beginning inventory level = 60 u
The forecasted demand for the next four quarters are: 1100, 830, 1000, and 1200 units. Suppose that you want to set the quarterly regular production constant at 900 units and to use overtime if necessary. You do not want to use any subcontract. Furthermore, you will keep inventory as low as possible. Stockouts are not allowed. You must perform the calculation and answer the questions shown below.
The beginning inventory in quarter 2 is ___ units
The overtime production in quarter 3 is ____ units
Total regular production is ____ units
Total overtime production is ____ units
Total regular production cost is $ _____
Total cost of increasing regular production is $ ____
Total cost of decreasing regular production is $ _____
Total cost of holding inventory is $ _____
Total cost of overtime production is $ ____
Total cost of production is $ _____
Explanation / Answer
Begning inventory Purchase Demand Production Overtime prod Closing stock Qtr 1 60 1110 1100 900 200 70 Qtr2 70 920 830 900 0 90 Qtr3 90 940 1000 900 30 100 Qtr4 100 1100 1200 900 300 4130 3600 530 260 Cost / unit $80 $120 $12 Total Cost $288,000 $63,600 $3,120
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