A manager would like to know the costs of using a level strategy that matches th

Question

A manager would like to know the costs of using a level strategy that matches the forecast below using a regular production rate of 230 units a month. In any period where on hand inventory and regular production do not equal forecast overtime can be used to make up the difference. If ending inventory is positive inventory holding costs are based on the average inventory for that period. Assume theat beginning inventory in period 1 is 0. Also, please note that ending inventory can not be negative. The specific costs are: Regular production = $35.00 Overtime production = $52.50 Inventory Holding Cost = $25.00 1. What is the total cost of this plan? 2. What is the Overtime cost for this plan? 2. What is the Inventory cost of this plan? Total Month 1 2 3 4 5 6 Forecast 240 260 280 180 200 220 1380 Output: Regular 230 230 230 230 230 230 1380 Part Time Overtime Subcontract Output - Fcast Inventory: Beginning Ending Average Backlog: COSTS: Regular Part Time Overtime Subcontract Hire/Layoff Inventory Back Orders Total Cost: $0.00 A manager would like to know the costs of using a level strategy that matches the forecast below using a regular production rate of 230 units a month. In any period where on hand inventory and regular production do not equal forecast overtime can be used to make up the difference. If ending inventory is positive inventory holding costs are based on the average inventory for that period. Assume theat beginning inventory in period 1 is 0. Also, please note that ending inventory can not be negative. The specific costs are: Regular production = $35.00 Overtime production = $52.50 Inventory Holding Cost = $25.00 1. What is the total cost of this plan? 2. What is the Overtime cost for this plan? 2. What is the Inventory cost of this plan? Total Month 1 2 3 4 5 6 Forecast 240 260 280 180 200 220 1380 Output: Regular 230 230 230 230 230 230 1380 Part Time Overtime Subcontract Output - Fcast Inventory: Beginning Ending Average Backlog: COSTS: Regular Part Time Overtime Subcontract Hire/Layoff Inventory Back Orders Total Cost: $0.00

Explanation / Answer

Month 1 2 3 4 5 6 Total Forecast 240 260 280 180 200 220 1380 Output Regular 230 230 230 230 230 230 1380 Overtime subcontract Output-Forecast -10 -30 -50 50 30 10 0 Inventory Beginning 0 -10 -40 -90 -40 10 Ending -10 -40 -90 -40 10 20 Average -5 -25 -65 -65 -15 15 -160 Backlog Cost Regular(*35) 8050 8050 8050 8050 8050 8050 48300 Overtime Subcontracting Inventory(*25) Backorder Total

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.