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You are the production manager for Annie's Tricky Emporium, in charge of making exploding cigars. The forecasted demand for cigars for the next four days is 220, 150, 100, and 70. It costs 50¢ to make each cigar and you sell them for $1. a. What is the recommended production rate if a level strategy is adopted with no back orders or stock outs? What is the ending inventory for day 4 under this plan? At the end of this period all the cigars have to be disposed of. What is your total revenue and your profit? b. What is the level production rate with no ending inventory in month 4? Backorders cost you a 25¢ penalty in sales price (essentially calculate as if you sold them on that same day at 75¢) What is your total revenue and your profit?

You are the production manager for Annie's Tricky Emporium, in charge of making exploding cigars. The forecasted demand for cigars for the next four days is 220, 150, 100, and 70. It costs 50¢ to make each cigar and you sell them for $1. a. What is the recommended production rate if a level strategy is adopted with no back orders or stock outs? What is the ending inventory for day 4 under this plan? At the end of this period all the cigars have to be disposed of. What is your total revenue and your profit? b. What is the level production rate with no ending inventory in month 4? Backorders cost you a 25¢ penalty in sales price (essentially calculate as if you sold them on that same day at 75¢) What is your total revenue and your profit?

Practical Management Science
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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Economics You are the production manager for Annie's Tricky Emporium, in charge of making exploding cigars. The forecasted demand for cigars for the next four days is 220, 150, 100, and 70. It costs 50¢ to make each cigar and you sell them for $1. a. What is the recommended production rate if a level strategy is adopted with no back orders or stock outs? What is the ending inventory for day 4 under this plan? At the end of this period all the cigars have to be disposed of. What is your total revenue and your profit? b. What is the level production rate with no ending inventory in month 4? Backorders cost you a 25¢ penalty in sales price (essentially calculate as if you sold them on that same day at 75¢) What is your total revenue and your profit? Please show all work. Thank you!
Transcribed Image Text:Economics You are the production manager for Annie's Tricky Emporium, in charge of making exploding cigars. The forecasted demand for cigars for the next four days is 220, 150, 100, and 70. It costs 50¢ to make each cigar and you sell them for $1. a. What is the recommended production rate if a level strategy is adopted with no back orders or stock outs? What is the ending inventory for day 4 under this plan? At the end of this period all the cigars have to be disposed of. What is your total revenue and your profit? b. What is the level production rate with no ending inventory in month 4? Backorders cost you a 25¢ penalty in sales price (essentially calculate as if you sold them on that same day at 75¢) What is your total revenue and your profit? Please show all work. Thank you!
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