-imum inventory of 100 units at all times. At present they are carrying 500 wheel- barows in inventory and they want to have the same number in stock at the end of te pianning period. Maximum production capacity is 1500 units per period in regular time and the piant is currently producing 800 units per period. Extra production, to a maximum of 100 units per period, can be added by working overtime. The overtime premium is $4 a unit more than regular time production. Some work can be subcontracted, but the subcontractor has limited facilities and can produce only 100 units per period. The cost of subcontracting adds $6 to the normal cost of a wheelbarrow. The rate of production can be changed at a cost of $6 a unit, which includes costs of hiring, train- ing, and layoff. CASE ANALYSIS As the new materials manager you have been asked to develop a production plan for the next year that will meet the company's objectives and minimize the costs in- volved. Are there any other considerations aside from minimizing cost?
-imum inventory of 100 units at all times. At present they are carrying 500 wheel- barows in inventory and they want to have the same number in stock at the end of te pianning period. Maximum production capacity is 1500 units per period in regular time and the piant is currently producing 800 units per period. Extra production, to a maximum of 100 units per period, can be added by working overtime. The overtime premium is $4 a unit more than regular time production. Some work can be subcontracted, but the subcontractor has limited facilities and can produce only 100 units per period. The cost of subcontracting adds $6 to the normal cost of a wheelbarrow. The rate of production can be changed at a cost of $6 a unit, which includes costs of hiring, train- ing, and layoff. CASE ANALYSIS As the new materials manager you have been asked to develop a production plan for the next year that will meet the company's objectives and minimize the costs in- volved. Are there any other considerations aside from minimizing cost?
Chapter1: Taking Risks And Making Profits Within The Dynamic Business Environment
Section: Chapter Questions
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