If management at Deforrest Marine Motors is interested in a level strategy with their current employees using overtime andsubcontracting when demand cannot be balanced with inventory, what is the total cost of this plan?6,099,200 Deforrest Marine Motors manufactures engines for the speedboat racing circuit. As part of their annual planning cycle, they forecasteddemand for the next four quarters. The number of available days of production and the anticipated demand are given below.EmployeesProduction RateProduction CostBackorder CostOvertime CostOvertime LimitDemandQ12,4006,019,000They also estimated many of the costs required to conduct operations planning. Some of these key figures are listed below.3070 units/employee/quarterQ22,200$1,000/unit$200/unit/quarter$1,500/unit<= 25% of Reg. ProductionQ31,700Q41,800Hire CostFire CostSubcontracting CostSubcontracting LimitInventory CostInitial Inventory$1,200/employee$800/employee$1,800/unit400 units maximum$100/unit/quarter280 unitsDeforrest Marine Motors wishes to maintain the current number of employees for the entire year to follow a level strategy balanced withinventory and backorders as needed. What is the total cost of this plan?

Under this plan/strategy, different levels of demand are met by maintaining a steady rate of regular production. Company wishes to maintain current number of employees for the whole year i.e., 30

Answered: Deforrest Marine Motors manufactures…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

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Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

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Please do not write in column A Problem 6 Given the following forecast and cost information, determine the total cost of a plan that uses regular time production output of 600 units per month, overtime is used when needed up to a maximum of 60 units per month, and subcontracting is used if additional units are needed to meet the forecast. Regular time cost $ 40.00 per unit Overtime cost $ 60.00 per unit subcontracting cost $ 80.00 per unit holding cost $ 10.00 per unit per month Production Inventory Costs Month Forecast Level Production Overtime Subcontracting Total Holding Cost Regular Time Overtime Subcontracting Total Cost 1 563 0 2 608 3 648 4 668 5 666 6 688 Totals
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Deforrest Marine Motors manufactures engines for the speedboat racing circuit. As part of their annual planning cycle, they forecasted demand for the next four quarters. The number of available days of production and the anticipated demand are given below.