The EGAD Bottling Company has decided to introduce a new line of premium bottled water that will include several "designer" flavors Marketing manager Georgianna Mercer is predicting an upturn in demand based on the new offerings and the increased public awareness of the health benefits of drinking more water. She has prepared aggregate forecasts for the next six months, as shown in the following table (quantities are in tank loads).

 

Production manager Mark Mercer (no relation to Georgianna) has developed the following information. (Costs are in thousands of dollars.) 

 

Among the strategies being considered are the following: 

• Level production supplemented by up to 10 tank loads a month from overtime. 

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

• Using overtime for up to 15 tank loads 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.

Transcribed Image Text:

Month May Jun Jul Aug Sep Oct Total Forecast 50 60 70 90 80 70 420 Month May Jun Jul Aug Sep Oct Total Forecast 50 60 70 90 80 70 420

Answer rating: 100% (QA)

Level productionplan produces same units in each month ie 60 and uses overtime to match the demand P... View the full answer