Please thoroughly answer all parts of this question 29. The manufacturing compan

Question

Please thoroughly answer all parts of this question

29. The manufacturing company Highlands Archery has forecast the demand for the Grizzly compound bow for the next 4 months. The production manager at High- lands Archery has already created an aggregate production plan, based on that information: Month 1 10,000 bows5,000 bows Produce 25,000 Produce 25,000 Month 3 30,000 bows Produce 25,000 bows Month 2 Demand Managers production plan bows Month 4 50,000 bows Produce 25,000 bows bows a. If Highlands Archery uses the manager's production plan, how many bows would be in inventory at the end of the fourth month? b. Following this plan, which month has the highest average inventory? c. If Highlands Archery pays $1 per bow to keep a bow in inventory for 1 month, what is the total inventory cost of the manager's plan, based on monthly ending inventory?

Explanation / Answer

( all amounts are in 1000)

Let, Bi =beginning inventory month i

Ei = ending inventory

Di = demand for month i

Pi = production volume for month i

Bi = ending inventory of previous month

Ei = Bi + Pi - Di

Average inventory = Ai =, (Bi + Ei)/2

For month 1,

Bi = 0, E1 = 0 + 25 - 10 = 15

A1 = (0+15)/2 =7.5

For month 2,

B2 = 15, E2 = 15+25-5 = 35, A2 =(15+35)/2=25

For month 3,

B3 = 35, E3=35+25-30=30, A3=(35+30)/2=32.5

For month 4,

B4=30, E4=30+25-50=5, A3=(30+5)/2=17.5

A. Inventory at the end of month 4 = 5,000

B. Highest average inventory is 32.5 in month 4.

C. Total inventory cost =$1 x total inventory for four months

= $1×(15+35+30+5)×1000

= 85,000

Total inventory cost = $85,000

Related Questions

Navigate

• Browse (All)
• Browse P
• Subjects

---