2.  A large Saskatchewan feed mill, B. Swart Processing, prepares its sixty-month aggregate plan by forecasting demand for 50-pound bags of cattle feed as follows: January, 1000 bags; February, 1200; March, 1250; April, 1450; May, 1400; and June, 1400. The feed mill plans to begin the new year with no inventory left over from the previous year, and backorders are not permitted. It projects that capacity (during regular hours) for producing bags of feed will remain constant at 800 until the end of April, and then increase to 1100 bags per month when a planned expansion is completed on May 1. Overtime capacity is set at 300 bags per month until the expansion, at which time it will increase to 400 bags per month. A friendly competitor in Alberta is also available as a backup source to meet demand—but can provide only 500 bags total during the six-month period. Develop a six-month production plan for the feed mill using the transportation method. Cost data are as follows:   Regular-time cost per bag (until April 30)         $12.00      Regular-time cost per bag (after May 1)            $11.00      Overtime cost per bag (during entire period)     $16.00       Cost of outside purchase per bag                        $18.50      Carrying cost per bag per month                         $ 1.00

Purchasing and Supply Chain Management
6th Edition
ISBN:9781285869681
Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson
Publisher:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson
ChapterC: Cases
Section: Chapter Questions
Problem 5.1SC: Scenario 3 Ben Gibson, the purchasing manager at Coastal Products, was reviewing purchasing...
icon
Related questions
icon
Concept explainers
Topic Video
Question

2. 

A large Saskatchewan feed mill, B. Swart Processing, prepares its sixty-month aggregate plan by forecasting demand for 50-pound bags of cattle feed as follows: January, 1000 bags; February, 1200; March, 1250; April, 1450; May, 1400; and June, 1400. The feed mill plans to begin the new year with no inventory left over from the previous year, and backorders are not permitted. It projects that capacity (during regular hours) for producing bags of feed will remain constant at 800 until the end of April, and then increase to 1100 bags per month when a planned expansion is completed on May 1. Overtime capacity is set at 300 bags per month until the expansion, at which time it will increase to 400 bags per month. A friendly competitor in Alberta is also available as a backup source to meet demand—but can provide only 500 bags total during the six-month period.

Develop a six-month production plan for the feed mill using the transportation method.

Cost data are as follows:

 

Regular-time cost per bag (until April 30)         $12.00     

Regular-time cost per bag (after May 1)            $11.00     

Overtime cost per bag (during entire period)     $16.00      

Cost of outside purchase per bag                        $18.50     

Carrying cost per bag per month                         $ 1.00

Expert Solution
steps

Step by step

Solved in 2 steps

Blurred answer
Knowledge Booster
Inventory management
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, operations-management and related others by exploring similar questions and additional content below.
Similar questions
Recommended textbooks for you
Purchasing and Supply Chain Management
Purchasing and Supply Chain Management
Operations Management
ISBN:
9781285869681
Author:
Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson
Publisher:
Cengage Learning
Practical Management Science
Practical Management Science
Operations Management
ISBN:
9781337406659
Author:
WINSTON, Wayne L.
Publisher:
Cengage,
Marketing
Marketing
Marketing
ISBN:
9780357033791
Author:
Pride, William M
Publisher:
South Western Educational Publishing
MARKETING 2018
MARKETING 2018
Marketing
ISBN:
9780357033753
Author:
Pride
Publisher:
CENGAGE L
Principles of Management
Principles of Management
Management
ISBN:
9780998625768
Author:
OpenStax
Publisher:
OpenStax College