Create a level plan with a zero ending inventory for the forecast shown in the table. There is nobeginning inventory and regular production capacity is 300 units. Overtime costs K15 extra and islimited to 25 units per month and subcontracting is limited to 60 units per month and costs K10 perunit. Back orders cost KS0 per unit and there is a cost of KS per month to hold a unit in inventory.What is the total plan cost?|MonthJanuaryFebruaryMarchForecast250300400|April350

It is given that, the regular production capacity is 300 units. Overtime costs are K15 extra and are…

Answered: Create a level plan with a zero ending…

Marketing

20th Edition

ISBN:9780357033791

Author:Pride, William M

Publisher:Pride, William M

Chapter19: Pricing Concepts

Section: Chapter Questions

Problem 6DRQ

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A manager has prepared a forecast of expected aggregate demand for the next six months. Develop an aggregate plan to meet this demand given this additional information: A level production rate of 500 units per month can be used. Backorders are allowed, and they are charged at the rate of $20 per unit per month. Inventory holding costs are $1 per unit per month in ending inventory. Determine the cost of this plan if regular time cost is $10 per unit and beginning inventory is zero. Overtime costs $16 per unit and subcontracting costs $20 per unit. In the 4th month, overtime is not possible. While outsourcing is not possible in the 3rd month. Overtime capacity is 50 units and subcontracting capacity is 50 units. Month Forecast 1                                             400 2 480 3 560 4 720 5…
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