Question: Consider the following and answer the questions. A manager would like to know the total cost of a chase strategy that matches the forecast below

Consider the following and answer the questions.
A manager would like to know the total cost of a chase strategy that matches the forecast below using a steady regular production rate of 200 units per month, a maximum of 20 units per month of overtime, and subcontracting as needed to make up any shortages. Initial inventory is zero.
Regular cost per unit = $35
Overtime cost per unit = $70
Subcontracting cost per unit = $80
We are using a chase strategy, i.e., we will use overtime or subcontracting in a given month to make up any shortages in that month.
Month
1
2
3
4
5
6
Forecast
230
200
240
240
250
240
Flag question: Question 1
Question 13 pts
Which months will experience a backlog?
Group of answer choices
2
All Of Them
1
3
Flag question: Question 2
Question 23 pts
How many units will it take to eliminate all the backlogs?
Group of answer choices
0
200
1000
600
Flag question: Question 3
Question 33 pts
How many months will require subcontracting?
Group of answer choices
6
1
0
5
Flag question: Question 4
Question 410 pts
What is the total cost of the strategy?
55,000
Flag question: Question 5
Question 51 pts
Will there be excess inventory left over at the end of period 6?
Group of answer choices
Yes
No

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related General Management Questions!