Question: Manager Chris Channing of Fabric Mills Inc has developed the

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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