LMNO Gaskets has formulated a production plan for a product to meet demand over the upcoming three quarters. Demand in each of the three quarters and production, overtime, and subcontracting capacities are reported in the table below, in addition to the feasible production plan. The relevant costs are: Regular time production cost is $25/unit. Overtime production cost is $32/unit. Subcontracting cost is $34/unit. Inventory is held at a cost of $3/unit/quarter. Units may be backordered at a cost of $5/unit/quarter. Production Resource Demand in Quarter Capacity Q1 Q2 Q3 Regular Time Q1 600 0 0 600 Overtime Q1 200 50 0 250 Subcontract Q1 0 0 0 500 Regular Time Q2 0 600 0 600 Overtime Q2 0 250 0 250 Subcontract Q2 0 490 10 500 Regular Time Q3 60 0 540 600 Overtime Q3 40 60 140 250 Subcontract Q3 0 0 0 500 Demand in Quarter 900 1450 690 What is the inventory cost for the year? What is the backorder cost for the year? What is the total overtime production cost for the year? What is the total cost for the three periods?
Critical Path Method
The critical path is the longest succession of tasks that has to be successfully completed to conclude a project entirely. The tasks involved in the sequence are called critical activities, as any task getting delayed will result in the whole project getting delayed. To determine the time duration of a project, the critical path has to be identified. The critical path method or CPM is used by project managers to evaluate the least amount of time required to finish each task with the least amount of delay.
Cost Analysis
The entire idea of cost of production or definition of production cost is applied corresponding or we can say that it is related to investment or money cost. Money cost or investment refers to any money expenditure which the firm or supplier or producer undertakes in purchasing or hiring factor of production or factor services.
Inventory Management
Inventory management is the process or system of handling all the goods that an organization owns. In simpler terms, inventory management deals with how a company orders, stores, and uses its goods.
Project Management
Project Management is all about management and optimum utilization of the resources in the best possible manner to develop the software as per the requirement of the client. Here the Project refers to the development of software to meet the end objective of the client by providing the required product or service within a specified Period of time and ensuring high quality. This can be done by managing all the available resources. In short, it can be defined as an application of knowledge, skills, tools, and techniques to meet the objective of the Project. It is the duty of a Project Manager to achieve the objective of the Project as per the specifications given by the client.
LMNO Gaskets has formulated a production plan for a product to meet demand over the upcoming three quarters. Demand in each of the three quarters and production, overtime, and subcontracting capacities are reported in the table below, in addition to the feasible production plan. The relevant costs are:
- Regular time production cost is $25/unit.
- Overtime production cost is $32/unit.
- Subcontracting cost is $34/unit.
- Inventory is held at a cost of $3/unit/quarter.
- Units may be backordered at a cost of $5/unit/quarter.
| Production Resource | Demand in Quarter | Capacity | ||
|---|---|---|---|---|
| Q1 | Q2 | Q3 | ||
| Regular Time Q1 | 600 | 0 | 0 | 600 |
| Overtime Q1 | 200 | 50 | 0 | 250 |
| Subcontract Q1 | 0 | 0 | 0 | 500 |
| Regular Time Q2 | 0 | 600 | 0 | 600 |
| Overtime Q2 | 0 | 250 | 0 | 250 |
| Subcontract Q2 | 0 | 490 | 10 | 500 |
| Regular Time Q3 | 60 | 0 | 540 | 600 |
| Overtime Q3 | 40 | 60 | 140 | 250 |
| Subcontract Q3 | 0 | 0 | 0 | 500 |
| Demand in Quarter | 900 | 1450 | 690 |
What is the inventory cost for the year?
What is the backorder cost for the year?
What is the total overtime production cost for the year?
What is the total cost for the three periods?
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