7-3. Nowjuice, Inc., produces Shakewell fruit juice. A planner has developed an aggregate forecast for demand (in cases) for the next eight months. month Apr forecast 4500 May 4400 Jun 6200 Jul 6400 Aug 5800 Sep 6600 Oct 7200 Nov 6900 Use the following information to develop aggregate plans. Regular production cost: $10.00 per case Regular production capacity: 5,000 cases Overtime production cost: $16 per case Subcontracting cost: $20 per case Holding cost: $1 per case per month Beginning inventory: 0 Develop an aggregate plan using each of the following guidelines and compute the total cost for each plan. Which plan has the lowest total cost? (a) Use level production of 5,000 case per month. Supplement using overtime as needed (b) Use a combination of overtime (500 cases per month for the first five months), inventory, and subcontracting (500 cases per month from September to November, if necessary) to handle variations in demand. Note that suitable amounts of overtime for the last three months should be found to determine the total cost.

Practical Management Science
6th Edition
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Author:WINSTON, Wayne L.
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Chapter2: Introduction To Spreadsheet Modeling
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7-3. Nowjuice, Inc., produces Shakewell fruit juice. A planner has developed an aggregate forecast
for demand (in cases) for the next eight months.
month Apr
forecast 4500
May
4400
Jun
6200
Jul
6400
Aug
5800
Sep
6600
Oct
7200
Nov
6900
Use the following information to develop aggregate plans.
Regular production cost: $10.00 per case
Regular production capacity: 5,000 cases
Overtime production cost: $16 per case
Subcontracting cost: $20 per case
Holding cost: $1 per case per month
Beginning inventory: 0
Develop an aggregate plan using each of the following guidelines and compute the total cost for
each plan. Which plan has the lowest total cost?
(a) Use level production of 5,000 case per month. Supplement using overtime as needed
(b) Use a combination of overtime (500 cases per month for the first five months), inventory, and
subcontracting (500 cases per month from September to November, if necessary) to handle
variations in demand. Note that suitable amounts of overtime for the last three months should
be found to determine the total cost.
Transcribed Image Text:7-3. Nowjuice, Inc., produces Shakewell fruit juice. A planner has developed an aggregate forecast for demand (in cases) for the next eight months. month Apr forecast 4500 May 4400 Jun 6200 Jul 6400 Aug 5800 Sep 6600 Oct 7200 Nov 6900 Use the following information to develop aggregate plans. Regular production cost: $10.00 per case Regular production capacity: 5,000 cases Overtime production cost: $16 per case Subcontracting cost: $20 per case Holding cost: $1 per case per month Beginning inventory: 0 Develop an aggregate plan using each of the following guidelines and compute the total cost for each plan. Which plan has the lowest total cost? (a) Use level production of 5,000 case per month. Supplement using overtime as needed (b) Use a combination of overtime (500 cases per month for the first five months), inventory, and subcontracting (500 cases per month from September to November, if necessary) to handle variations in demand. Note that suitable amounts of overtime for the last three months should be found to determine the total cost.
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