PROBLEM 2 = A manager would like to know the total cost of a chase strategy...

Transcribed Image Text:

PROBLEM 2 = 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 180 units per month, a maximum of 20 units per month of overtime, and subcontracting as needed per month (totaling 100 units) to make up any shortages. Regular cost per unit $25. Overtime cost per unit = $50. Subcontracting cost per unit = $70. 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. Ignore Inventory. Month 1 Forecast 250 2 3 4 5 6 220 260 260 270 260 FIRST STEP: Calculate the subcontract units needed to complete the forecast per month Period 1 2 3 4 5 6 Total Forecast 250 220 260 260 270 260 1,520 Output Regular 220 220 220 220 220 220 1,320 Part Time Overtime 20 20 20 20 20 100 Subcontract 0 Output - Forecast 0 0 0 0 0 0 0 Inventory Beginning 0 0 0 0 0 0 Ending 0 0 0 0 0 0 Average 0 0 0 0 0 0 0 Backlog 0 0 0 0 0 0 0 Costs: Regular (a) 25 Part Time (a) $0 $0 $0 $0 $0 $0 Overtime @ 50 Subcontr @ 70 Hire/Layoff Inventory (a) $0 $0 Back ord @ $0 $0 ]]g| $0 $0 $0 $0 $0 $0 $0 Total $0 $0 $0 $0 $0 $0 48888888 $0 $0 $0 $0 $0 $0 $0 Conclusion: Total cost = PROBLEM 2 = 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 180 units per month, a maximum of 20 units per month of overtime, and subcontracting as needed per month (totaling 100 units) to make up any shortages. Regular cost per unit $25. Overtime cost per unit = $50. Subcontracting cost per unit = $70. 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. Ignore Inventory. Month 1 Forecast 250 2 3 4 5 6 220 260 260 270 260 FIRST STEP: Calculate the subcontract units needed to complete the forecast per month Period 1 2 3 4 5 6 Total Forecast 250 220 260 260 270 260 1,520 Output Regular 220 220 220 220 220 220 1,320 Part Time Overtime 20 20 20 20 20 100 Subcontract 0 Output - Forecast 0 0 0 0 0 0 0 Inventory Beginning 0 0 0 0 0 0 Ending 0 0 0 0 0 0 Average 0 0 0 0 0 0 0 Backlog 0 0 0 0 0 0 0 Costs: Regular (a) 25 Part Time (a) $0 $0 $0 $0 $0 $0 Overtime @ 50 Subcontr @ 70 Hire/Layoff Inventory (a) $0 $0 Back ord @ $0 $0 ]]g| $0 $0 $0 $0 $0 $0 $0 Total $0 $0 $0 $0 $0 $0 48888888 $0 $0 $0 $0 $0 $0 $0 Conclusion: Total cost =