For the past 5 years, Sonic's Burgers has produced frozen vegan burger patties via a combination...

   

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For the past 5 years, Sonic's Burgers has produced frozen vegan burger patties via a combination of in-house manufacturing and subcontracting. Their 'historical plan' has always been to hold staffing steady in the first half of the year and make 550 cases per month via regular time production at a cost of $65 per case. Previous Output is 460. Back-orders are not acceptable to their customers. When utilized, the subcontractor, normally a direct competitor, charges Sonic's $85 per case. There is no beginning inventory. The cost of increasing or decreasing capacity (hiring/layoff) is $20 per unit. Inventory holding costs $15 per case. Cost of lost sales is $45. Looking ahead, the operations manager forecasts demand of: Jan 400 Feb 700 March 600 April 780 May 400 June 700 a. What would the costs be to continue to follow the 'historical plan'? [Select ] The operations manager is considering a second plan. In this scenario, the plant will increase regular time production to 600 units per month for the first 3 months (January-March), then drop to 530 units for the last three months. b. What is the cost of the second plan? [Select] The final plan (which includes all costs and demands mentioned so far) would be to produce 525 units per month regular time, and out-source (subcontract) only when necessary to avoid any lost sales. (the capacity of the subcontractor is 100 units) c. What is the cost of plan 3? [Select] d. Based on costs, which plan should be chosen? [Select] < For the past 5 years, Sonic's Burgers has produced frozen vegan burger patties via a combination of in-house manufacturing and subcontracting. Their 'historical plan' has always been to hold staffing steady in the first half of the year and make 550 cases per month via regular time production at a cost of $65 per case. Previous Output is 460. Back-orders are not acceptable to their customers. When utilized, the subcontractor, normally a direct competitor, charges Sonic's $85 per case. There is no beginning inventory. The cost of increasing or decreasing capacity (hiring/layoff) is $20 per unit. Inventory holding costs $15 per case. Cost of lost sales is $45. Looking ahead, the operations manager forecasts demand of: Jan 400 Feb 700 March 600 April 780 May 400 June 700 a. What would the costs be to continue to follow the 'historical plan'? [Select ] The operations manager is considering a second plan. In this scenario, the plant will increase regular time production to 600 units per month for the first 3 months (January-March), then drop to 530 units for the last three months. b. What is the cost of the second plan? [Select] The final plan (which includes all costs and demands mentioned so far) would be to produce 525 units per month regular time, and out-source (subcontract) only when necessary to avoid any lost sales. (the capacity of the subcontractor is 100 units) c. What is the cost of plan 3? [Select] d. Based on costs, which plan should be chosen? [Select] < For the past 5 years, Sonic's Burgers has produced frozen vegan burger patties via a combination of in-house manufacturing and subcontracting. Their 'historical plan' has always been to hold staffing steady in the first half of the year and make 550 cases per month via regular time production at a cost of $65 per case. Previous Output is 460. Back-orders are not acceptable to their customers. When utilized, the subcontractor, normally a direct competitor, charges Sonic's $85 per case. There is no beginning inventory. The cost of increasing or decreasing capacity (hiring/layoff) is $20 per unit. Inventory holding costs $15 per case. Cost of lost sales is $45. Looking ahead, the operations manager forecasts demand of: Jan 400 Feb 700 March 600 April 780 May 400 June 700 a. What would the costs be to continue to follow the 'historical plan'? [Select ] The operations manager is considering a second plan. In this scenario, the plant will increase regular time production to 600 units per month for the first 3 months (January-March), then drop to 530 units for the last three months. b. What is the cost of the second plan? [Select] The final plan (which includes all costs and demands mentioned so far) would be to produce 525 units per month regular time, and out-source (subcontract) only when necessary to avoid any lost sales. (the capacity of the subcontractor is 100 units) c. What is the cost of plan 3? [Select] d. Based on costs, which plan should be chosen? [Select] < For the past 5 years, Sonic's Burgers has produced frozen vegan burger patties via a combination of in-house manufacturing and subcontracting. Their 'historical plan' has always been to hold staffing steady in the first half of the year and make 550 cases per month via regular time production at a cost of $65 per case. Previous Output is 460. Back-orders are not acceptable to their customers. When utilized, the subcontractor, normally a direct competitor, charges Sonic's $85 per case. There is no beginning inventory. The cost of increasing or decreasing capacity (hiring/layoff) is $20 per unit. Inventory holding costs $15 per case. Cost of lost sales is $45. Looking ahead, the operations manager forecasts demand of: Jan 400 Feb 700 March 600 April 780 May 400 June 700 a. What would the costs be to continue to follow the 'historical plan'? [Select ] The operations manager is considering a second plan. In this scenario, the plant will increase regular time production to 600 units per month for the first 3 months (January-March), then drop to 530 units for the last three months. b. What is the cost of the second plan? [Select] The final plan (which includes all costs and demands mentioned so far) would be to produce 525 units per month regular time, and out-source (subcontract) only when necessary to avoid any lost sales. (the capacity of the subcontractor is 100 units) c. What is the cost of plan 3? [Select] d. Based on costs, which plan should be chosen? [Select] <

Answer rating: 100% (QA)

SOLUTION a To calculate the costs of following the historical plan we need to consider the production costs subcontracting costs inventory holding costs and the cost of lost sales Production cost per ... View the full answer