Your company Produces leaf blowers, and due to their seasonally, your sales fore

Question

Your company Produces leaf blowers, and due to their seasonally, your sales forecast is as shown below. The cost of producing a blower using regular time is $6. and your regular capacity is 50 per period you can Produce up to an additional 11 blowers per period at $9 per unit using overtime, You have can sub contract for up to 15 blowers per period at $ 11.50 per unit the cost of holding inventory is $1 per unit per period, based on the average inventory in the period. At the start of this planning period 6, you have a beginning inventory of 5 units.

Explanation / Answer

Period 6 7 8 9 10 11 Total Forecast a 50 60 70 80 50 60 370 Opening Inventory b 5 12 13 4 0 0 34 Regular Production c 50 50 50 50 50 50 300 Overtime Production d 7 11 11 11 0 10 50 Subcontract e 0 0 0 15 0 0 15 Total Production f=c+d+e 57 61 61 76 50 60 365 Closing Inventory g=b+f-a 12 13 4 0 0 0 29 Back Order h 0 0 0 0 0 0 0 Average Inventory i=(b+g)/2 8.5 12.5 8.5 2 0 0 31.5 Cost Regular Cost @ $6 j=c*$6 $300.00 $300.00 $300.00 $300.00 $300.00 $300.00 $1,800.00 Overtime Cost @ $9 k=d*$9 $63.00 $99.00 $99.00 $99.00 $0.00 $90.00 $450.00 Subcontract Cost @ 11.50 l=e*$11.50 $0.00 $0.00 $0.00 $172.50 $0.00 $0.00 $172.50 Storage Cost @ 1 m=i*$1 $8.50 $12.50 $8.50 $2.00 $0.00 $0.00 $31.50 Back Order Cost @ $100 n=h*$100 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 Total Cost j+k+l+m+n $2,454.00

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