Is it better to backorder customer orders or increase production capacity to meet the customer orders? Please explain your reasoning behind the choice

Please share the total dollars of the production plan cost.

 

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Month Forecast demand Output Regular permanent Temporary Overtime Output-Forecast Inventory Beginning Ending Average Back order! Costs Labour Regular perm (at $X/unit) Temporary staff quantity Temporary (at $X/unit) Overtime (at SX/unit) Hire temporary (at $X/unit) Inventory (at $X/unit/month) Back order (at $X/unit/month) Total cost Costs Labour 1 5,000 2,500 Permanent workforce= 375 Production per month= 6,000 Initial inventory = 2,500 Desired ending inventory at end of the sixth month= 2,000 Temporary = $ Regular time $ overtime = $ $ 5,000 units or units units 250.00 per unit 375.00 per unit 250.00 per unit $ 3 7,000 16 S 4 9,000 per worker $ 5 13,000 $ 6 4,000 $ $ $ S ste Total 43,000 0 oooooooo 2,500 Month Forecast demand Output Regular permanent Temporary Overtime Output-Forecast Inventory Beginning Ending Average Back order! Costs Labour Regular perm (at $X/unit) Temporary staff quantity Temporary (at $X/unit) Overtime (at SX/unit) Hire temporary (at $X/unit) Inventory (at $X/unit/month) Back order (at $X/unit/month) Total cost Costs Labour 1 5,000 2,500 Permanent workforce= 375 Production per month= 6,000 Initial inventory = 2,500 Desired ending inventory at end of the sixth month= 2,000 Temporary = $ Regular time $ overtime = $ $ 5,000 units or units units 250.00 per unit 375.00 per unit 250.00 per unit $ 3 7,000 16 S 4 9,000 per worker $ 5 13,000 $ 6 4,000 $ $ $ S ste Total 43,000 0 oooooooo 2,500

Answer rating: 100% (QA)

ANSWER It is better to increase production capacity to meet customer orders rather than ba... View the full answer