Question: 7. Consider the following data on demand for a product over the next 12 months: Jan. 60 Jul. 100 Feb. 80 Aug. 80 Mar. 130

7. Consider the following data on demand for a

7. Consider the following data on demand for a product over the next 12 months: Jan. 60 Jul. 100 Feb. 80 Aug. 80 Mar. 130 Sep. 140 Apr. 120 Oct. 100 May 110 Nov. 60 Jun. 0 Dec. 40 It is now January 1, and there is no inventory on hand. The production rate is very much higher than the demand rate and all production (if any) takes place at the beginning of the month. Fixed cost for a production run is $3000, variable costs are $400 per unit, and the carrying cost is based upon an annual rate of 36 cents on the dollar. Plan the production to meet demand for the upcoming year using each of the following methods. In each case, compute the total variable costs (setup costs and holding costs). 1) A single production run in January. 2) Lot-for-lot production, i.e., produce in each month an amount sufficient to meet demand for that month. 3) Production that is based on keeping each lot as close as possible to an EOQ value computed from average monthly demand. 4) The Silver-Meal heuristic. 5) The Least Unit Cost heuristic. 6) The Part Period Balancing heuristic. 7) Which method yields the best plan

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