Please thoroughly answer all parts of this question 31. General Food Stuffs pack
ID: 329537 • Letter: P
Question
Please thoroughly answer all parts of this question
31. General Food Stuffs packages a variety of breakfast cereals and snack bars, which it aggregates as simply units of sale when doing medium-term planning. General Food Stuffs has created the following aggregate plan for the next 6 months Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Forecast (units 25,000 35,000 of sale) 5,000 5,000 5,000 20,000 Overall 35,000 40,000 10,000 20,000 Ending inventory Regular time Overtime General Food Stuffs can produce up to 30,000 units of sale a month in regular time, when production costs are only $1.50 per unit of sale. When General Food Stuffs plans to exceed 30,000 units of sale produced in a single month, all units of sale in excess of 30,000 must be produced in overtime production at a cost of $2.50 per unit of sale. General Food Stuffs actually has 5,000 units of sale available in inventory at the start of month 1, and it will cost $0.50 to hold one unit of sale for 1 month. a. What is the ending inventory for month 3 in this plan? b. What is th c. Logically, what is the total amount that General Food Stuffs plans to produce in e average inventory for month 5 in this plan? overtime production in this plan? d. Assuming that General Food Stuffs calculates inventory holding costs based on ending inventory levels, what is the total cost of this plan?Explanation / Answer
Above table shows ths full calculation, from this we can find answers to the required questions
a. ending inventory for month 3 = 5000
b, Average inventory for month 5 = 10000+5000/2 = 7500
c. Total overtime production = 5000+10000 = 15000
d. Total cost based on ending inventory = $30000
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 forecast (units of sale) 25000 35000 15000 5000 5000 20000 overall production 35000 40000 0 10000 0 20000 beginning inventory 5000 15000 20000 5000 10000 5000 ending inventory 15000 20000 5000 10000 5000 5000 regular time production 30000 30000 0 10000 0 20000 overtime production 5000 10000 0 0 0 0 Production cost 57500 70000 0 15000 0 30000 Holding cost 2500 7500 10000 2500 5000 2500 Total cost 60000 77500 10000 17500 5000 32500