Answered: Regular-time cost per bag (until April…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

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

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Question

A large St. Louis feed mill, Robert Orwig Processing,
prepares its 6-month aggregate plan by forecasting demand for
50-pound bags of cattle feed as follows: Ja nuary, 1,000 bags;
February, I ,200; March, I ,250; April, 1,450; May, I ,400; and June,
I ,400. The feed mill plans to begin the new year with no inventory
left over from the previous year, and backorders a re not permitted.
It projects that capacity (during regular hours) for p roducing
bags of feed will remain constant at 800 until the end of April, and
then increase to 1,100 bags per month when a planned expansion
is completed on May I. Overtime capacity is set at 300 bags per
month until the expansion, at which time it will increase to 400
bags per month. A friendly competitor in Sioux City, Iowa, is a lso
available as a backup source to meet demand but can provide
only 500 bags total during the 6-month period. Develop a 6-month
production plan for the feed mill using the transportation method.