Question

Manager Chris Channing of Fabric Mills, Inc., has developed the forecast shown in the table for bolts of cloth. The figures are in hundreds of bolts. The department has a regular output capacity of 275(00) bolts per month, except for the seventh month, when capacity will be 250(00) bolts. Regular output has a cost of $ 40 per hundred bolts. Workers can be assigned to other jobs if production is less than regular. The beginning inventory is zero bolts.


a. Develop a chase plan that matches the forecast and compute the total cost of your plan. Over-time is $ 60 per hundred bolts. Regular production can be less than regular capacity.
b. Would the total cost be less with regular production with no overtime, but using a subcontractor to handle the excess above regular capacity at a cost of $ 50 per hundred bolts? Backlogs are not allowed. The inventory carrying cost is $ 2 per hundredbolts.


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  • CreatedDecember 30, 2014
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