A manufacturing firm uses a production-planning horizon of four quarters. It allows for regular time, overtime, and subcontracting production to meet the demand. Anticipation inventory is also allowed, but not backorders. The beginning or current inventory is 100 units. As a managerial policy, the firm also wishes to have an ending inventory of 70 units at the end of the fourth quarter.
The transportation method has been used to develop a suitable aggregate plan. The optimal production plan, given the demand forecasts, costs, and capacities, is depicted above. Use this optimal production plan to answer the following questions.
a.
What will be the total ending inventory in the first quarter after the first quarter's demand is satisfied?
b.
What is the overtime production in the fourth quarter?
c.
What is the unused regular-time capacity in the third quarter?
d.
In which quarter(s) is(are) the subcontracting option(s) used?
e.
What is the total cost of the optimal production plan?
f.
What is the demand forecast for quarter 3?
g.
What is the demand forecast for quarter 4?
h.
What is the inventory carrying cost in dollars per unit per quarter?
i.
What is the overtime cost in dollars per unit?
Production efficiency.
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