Maha industries produces a product whose anticipated demand for the six periods is 263, 256, 301, 312, 304 and 294. The firm chooses chase demand production strategy. The regular production cost is RO 12 per unit with a maximum regular production of 280 units per period. While, the overtime and subcontract costs are RO 20 and RO 25 per unit respectively. There is no limit on subcontracting: however, maximum overtime production capacity is 10. Average inventory holding cost is RO 5 per unit per period. How many units in total will be produced in overtime production? O a. 0 O b. None is correct O c. 40 O d. 1639 O e. 51

Maha industries produces a product whose anticipated demand for the six periods is 263, 256, 301, 312, 304 and 294. The firm chooses chase demand production strategy. The regular production cost is RO 12 per unit with a maximum regular production of 280 units per period. While, the overtime and subcontract costs are RO 20 and RO 25 per unit respectively. There is no limit on subcontracting: however, maximum overtime production capacity is 10. Average inventory holding cost is RO 5 per unit per period. How many units in total will be produced in overtime production? O a. 0 O b. None is correct O c. 40 O d. 1639 O e. 51

Understanding Business

12th Edition

ISBN:9781259929434

Author:William Nickels

Publisher:William Nickels

Chapter1: Taking Risks And Making Profits Within The Dynamic Business Environment

Section: Chapter Questions

Problem 1CE

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Maha industries produces a product whose anticipated demand for the six periods is 263, 256, 301, 312, 304, and 294. The firm chooses chase demand production strategy. The regular production cost is RO 12 per unit with a maximum regular production of 280 units per period. While, the overtime and subcontract costs are RO 20 and RO 25 per unit respectively. There is no limit on subcontracting; however, maximum overtime production capacity is 10. Average inventory holding cost is RO 5 per unit per period. What will be the total cost of subcontracting the production? O a. 800 O b. 19668 O c. 0 O d. 1275 e. None is correct