Month	May	Jun	Jul	Aug	Sept	Oct	Total
Forecast	60	60	70	90	90	80	???

Production manager Yohanes has developed the following information. (Costs are in thousands of dollars.)

Regular production cost $1 per tankload

Regular production capacity 70 tankloads

Overtime production cost $1.5 per tankload

Subcontracting cost $1.8 per tankload

Holding cost $2 per tankload per month

Backordering cost Backlogs are not allowed

Beginning inventory 0 tankloads

Among the strategies being considered are the following:

1. Level production supplemented by up to 10 tankloads a month from overtime.

2. A combination of overtime, inventory, and subcontracting. Regular production should be the same each month.

3. Using overtime for up to 15 tankloads a month, along with inventory to handle variations. Regular production should be the same each month.

Question

1. The objective is to choose the plan that has the lowest cost. Which plan would you recommend?

2. Presumably, information about the new line has been shared with supply chain partners. Explain what information should be shared with various partners, and why sharing that information is important.

Answer rating: 100% (QA)

Step 1 Aggregate planning It is a technique by which an organization maintains the inventory to avoid the delays and wastage in the process step 2 Con... View the full answer