Planners for a company that makes several models of skis are about to prepare an

Question

Planners for a company that makes several models of skis are about to prepare an aggregate plan that will cover 6 periods. They have assembled the following information: Period Forecast 2 200 200 200-1 200 300 200 600 Capacity Regular: 300 units per period Costs Regular output: $2 per unit Overtime output: $3 per unit Subcontract: $6 per unit Inventory. $1 per unit per period Back order: $5 per unit per period Beginning Inventory: 0 Use a level capacity production plan. Assume that overtime and subcontracting is not allowed. Backordering may be used when necessary. You may use the spreadsheet below to aid you in your computations. Period Forecast Output: 6 200 200 200 600 200 300 Reaular

Explanation / Answer

Total cost of this plan under a level capacity is $ 4,500

correct answer is option e. $ 4,500

Capacity per period 300 units Costs Regular output per unit $2 Overtime Output per unit $3 Subcontract per unit $6 inventory per unit per period $1 Back order per unit per period $5 Beginning inventory 0 Period 1 2 3 4 5 6 Total Forecast 200 200 600 200 300 200 1700 Beginning inventory 0 100 200 -100 0 0 Available production 300 300 300 300 300 300 1800 Ending inventory 100 200 -100 0 0 100 Costs Regular Production Cost $600 $600 $600 $600 $600 $600 $3,600 Back order $500 $500 Inventory $100 $200 $0 $0 $0 $100 $400 Total $700 $800 $600 $1,100 $600 $700 $4,500

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