Concept explainers
Interpretation:
A good or service providing organization which make aggregate planning decisions.
Concept Introduction:
A good producing organization refers to the company which produce and manufacture product to fulfil the demand of the end consumer. A service-providing organization refers to the company which provide services to the end-consumer by satisfying the needs or want.
Explanation of Solution
S is the company which manufactures stainless steel utensils and cutlery. They started their export with merchandise exporting and slowly they began to setup in-house manufacturing unit. The export takes place across different parts of the world majorly USA and Europe. S has a unique pricing strategy which revolves around 1%, 7% and 14% margin model. This means they operate at a very low margin which helps them to attract more customers. The promotion and advertisement is mainly through social media and cold emailing. There are fixed labours in the factory so hiring and firing does not take place and there are no subcontractors needed for the production. They hold inventory for just two to three days and then transport it to customer through sea shipment.
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Chapter 13 Solutions
OM6 ONLINE-LMS INTEGRATED ACCESS
- . Manager T. C. Downs of Plum Engines, a producer of lawn mowers and leaf blowers, must developan aggregate plan given the forecast for engine demand shown in the table. The department has aregular output capacity of 130 engines per month. Regular output has a cost of $60 per engine. Thebeginning inventory is zero engines. Overtime has a cost of $90 per engine.a. Develop a chase plan that matches the forecast and compute the total cost of your plan. Regularproduction can be less than regular capacity. b. Compare the costs to a level plan that uses inventory to absorb fluctuations. Inventory carryingcost is $2 per engine per month. Backlog cost is $90 per engine per month. There should not bea backlog in the last month.MONTH1 2 3 4 5 6 7 8 TotalForecast 120 135 140 120 125 125 140 135 1,040arrow_forwardEZ-Windows, Inc. manufacturers replacement windows for the home remodeling business. In January, the company produces 15,000 windows and ended the month with 9,000 windows in inventory. EZ-Windows' management team would like to develop a production schedule for the next three months. A smooth production schedule is obviously desirable because it maintains the current workforce and provides a similar month-to-month operation. However, given the sales forecasts, the productioncapacities, and the storage capabilities as shown in Table 2, the management team does not think a smooth production schedule with the same production quantity each month possible.The company's cost accounting department estimates that increasing production by one window from one month to the next will increase total costs by $1.00 for each unit increase in the production level. In addition, decreasing production by one unit from one month to the next will increase total costs by $0.65 for each unit decrease in the…arrow_forwardSoutheast Soda Pop, Inc., has a new fruit drink forwhich it has high hopes. John Mitten thai, the production planner,has assembled the fo llowing cost data and demand forecast: John's job is to develop an aggregate plan. The three initialoptions he wants to evaluate are:• Plan A: a strategy that hires and fires personnel as necessaryto meet the forecast.• Plan B: a level strategy.• Plan C: a level strategy that produces 1,200 cases per quarterand meets the fo recast demand with inventory and subcontracting.a) Which strategy is the lowest-cost plan?b) If you are John's boss, the VP for operations, which p lan doyou implement and why?arrow_forward
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