Chapman Pharmaceuticals, a large manufacturer of drugs, has this aggregate demand forecast for a liquid cold medicine:
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Question:
Chapman Pharmaceuticals, a large manufacturer of drugs, has this aggregate demand forecast for a liquid cold medicine:
| Month | J | F | M | A | M | J | J | A | S | O | N | D |
| Liters (1,000s) | 200 | 120 | 75 | 40 | 15 | 7 | 5 | 10 | 30 | 70 | 120 | 180 |
The firm has a normal production rate of 90,000 liters per month and the initial inventory is 100,000 liters. Inventory-holding costs are $30 per 1,000 liters per month, and regular-time production costs are $400 per 1,000 liters. Overtime costs an additional 20 percent, and undertime costs an additional 12 percent. Assume that there are no lost sales or rate change costs. Compute the costs of level and chase demand production plans.
Expert Answer:
Costs of level demand production plans Cost of Level Demand Production Plan Production Cost 400 P... View the full answer
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