Question: The Baily Corporation has developed a specialized software program that improves inventory control capability. The following table/information provides the necessary data to evaluate: Quarter Forecast
The Baily Corporation has developed a specialized software program that improves inventory control capability. The following table/information provides the necessary data to evaluate:
| Quarter | Forecast (units) | Regular Time | Overtime | Sub-Contract |
| 1 | 500 | 400 | 80 | 100 |
| 2 | 750 | 400 | 80 | 100 |
| 3 | 900 | 800 | 160 | 100 |
| 4 | 450 | 400 | 80 | 100 |
Initial Inventory = 200 units
Regular Time Cost = $2.50/unit
Overtime Cost = $1.00/extra per unit
Subcontracting Cost = $4.00/unit
Carrying Cost = $.50/unit
Back-Order Cost = $.75/unit
a. Find the optimal plan using the transportation method. [ Select ] ["$6,535", "$6,890", "$6,345", "$6,289"]
The company decides that the initial inventory of 200 units will incur the 50/unit carrying from the prior quarter.
b. What is the total cost of the plan including this initial inventory cost adjustment? [ Select ] ["$6,635", "$6,734", "$6,832", "$6,535"]
c. Does any overtime time capacity go unused? [ Select ] ["yes", "cannot determine", "no"] If so/not, how much in which periods or not? [ Select ] ["period 3 - 60 units, period 4 - 30 units", "period 2 - 10 units, period 3 - 60 units, period 4 - 100 units", "period 3 - 100 units, period 4 - 30 units", "all overtime capacity is used"]
d. What is the extent of back-ordering in units and dollars? [ Select ] ["90 units", "50 units", "180 units", "0 - no back-ordering was utilized"]
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