A manufacturing firm uses a level utilization production-planning horizon of three months. They have developed a forecast
Question:
A manufacturing firm uses a level utilization production-planning horizon of three months. They have developed a forecast for the coming three months that appears in the table. They can add no more than 5% of their production capacity as overtime and can order no more than 10% of a month's regular capacity via subcontractors. The company has a zero backorder policy but has space for a maximum of 250 items in their finished goods inventory. All extra costs are shown in the table.
October | November | December | |
Forecasted Demand | 2,100 | 1,900 | 2,350 |
Regular Capacity | 2,000 | 2,000 | 2,000 |
Workforce level | |||
Overtime ($50/unit) | |||
Subcontracting ($120/unit) | |||
Inventory holding ($15/unit) | |||
Total Cost |
1) Use the information in Table 10.1. What is the total cost (overtime, subcontracting, and inventory holding costs) for the month of December corresponding to the least-cost production plan?
A) $8,000
B) $10,000
C) $11,000
D) $12,500
2) Use the information in Table 10.1. What is the total cost (overtime, subcontracting, and inventory holding costs) over the planning horizon (i.e. for the months of October, November and December combined) corresponding to the least cost production plan?
A) $20,000
B) $12,000
C) $24,000
D) $25,000
3) Use the information in Table 10.1. What is the ending inventory for the month of November corresponding to the least cost production plan?
A) -100 units
B) 0 units
C) 100 units
D) 200 units
4) Use the information in Table 10.1. How many units are produced using overtime for the month of December corresponding to the least cost production plan?
A) 0 units
B) 50 units
C) 100 units
D) 200 units
5) Use the information in Table 10.1. How many units are produced using subcontracting for the month of December corresponding to the least cost production plan?
A) 0 units
B) 50 units
C) 100 units
D) 200 units
Managerial economics
ISBN: 978-1118041581
7th edition
Authors: william f. samuelson stephen g. marks