OLVE USING EXCEL Chapman Pharmaceuticals, a large manufacturer of drugs, has this aggregate demand forecast (in thousands of liters) for a liquid cold medicine. Month January February March April May June Demand 200 120 75 40 15 7 The firm has a normal production rate of 90 thousand liters per month, and the initial inventory is 100 thousand liters. Inventory holding costs are $30 per 1,000 liters per month, regular-time production costs are $400 per 1,000 liters. Overtime costs an additional 20 percent, and undertime costs an additional 12 percent. Assume that there are no lost sales or rate change costs. Compute and compare the total cost of a level production rate of 90 thousand liters per month and a chase demand production plan.
SOLVE USING EXCEL
Chapman Pharmaceuticals, a large manufacturer of drugs, has this aggregate demand
Month January February March April May June
Demand 200 120 75 40 15 7
The firm has a normal production rate of 90 thousand liters per month, and the initial inventory is 100 thousand liters. Inventory holding costs are $30 per 1,000 liters per month, regular-time production costs are $400 per 1,000 liters. Overtime costs an additional 20 percent, and undertime costs an additional 12 percent. Assume that there are no lost sales or rate change costs. Compute and compare the total cost of a level production rate of 90 thousand liters per month and a chase demand production plan.
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