
Concept explainers
Compute the total cost for each aggregate plan using these unit costs:
Regular output = $40
Overtime = $50
Subcontract = $60
Average Balance Inventory = $10
a.
b.
c. (Refer to part b) After complaints from some workers about working overtime every month during the first half of the year, the manager is now considering adding some temporary workers for the second half of the year, which would increase regular output to a steady 350 units a month, not using any overtime, and using subcontracting to make up needed output. Determine the total cost of that plan.
a)

To compute: The total cost for each aggregate plan
Introduction: The aggregate plan is the output of sales and operations planning. The major concern of aggregate planning is the production time and quantity for the intermediate future. Aggregate planning would encompass a time prospect of approximately 3 to 18 months.
Answer to Problem 1P
Explanation of Solution
Given information:
Regular output is $40, overtime is $50, subcontract is $60, and average balance inventory is $10.
In addition to this, the following information is given:
Month | January | February | March | April | May | June |
Forecast | 300 | 320 | 320 | 340 | 320 | 320 |
Regular | 300 | 300 | 300 | 300 | 300 | 300 |
Overtime | 20 | 20 | 20 | 20 | 20 | 20 |
Subcontract | 0 | 0 | 0 | 0 | 0 | 0 |
Determine the aggregate plan to compute total cost:
Month | January | February | March | April | May | June | Total | |
Forecast | 300 | 320 | 320 | 340 | 320 | 320 | 1,920 | |
Output | ||||||||
Regular | 300 | 300 | 300 | 300 | 300 | 300 | 1,800 | |
Part-time | ||||||||
Overtime | 20 | 20 | 20 | 20 | 20 | 20 | 120 | |
Subcontract | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |
Difference | 20 | 0 | 0 | -20 | 0 | 0 | 0 | |
Inventory | ||||||||
Beginning | 0 | 20 | 20 | 20 | 0 | 0 | 60 | |
Ending | 20 | 20 | 20 | 0 | 0 | 0 | 60 | |
Average | 10 | 20 | 20 | 10 | 0 | 0 | 60 | |
Backlog | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |
Costs | ||||||||
Regular | 40 | $12,000 | $12,000 | $12,000 | $12,000 | $12,000 | $12,000 | $72,000 |
Part-time | ||||||||
Overtime | 50 | $1,000 | $1,000 | $1,000 | $1,000 | $1,000 | $1,000 | $6,000 |
Subcontract | 60 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
Hire/Layoff | ||||||||
Inventory | 10 | $100 | $200 | $200 | $100 | $0 | $0 | $600 |
Backorders | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
$13,100 | $13,200 | $13,200 | $13,100 | $13,000 | $13,000 | $78,600 |
Supporting calculation:
Forecast, regular time units, overtime, and subcontract units were given.
Calculate the difference of month January:
It is the calculation of difference between forecast and output. Hence, it can be calculated by subtracting the forecast from the output. Hence, the difference is 20 units.
Calculate the difference of month February:
It is the calculation of difference between forecast and output. Hence, it can be calculated by subtracting the forecast from the output. Hence, the difference is 0 units.
Calculate the difference of month March:
It is the calculation of difference between forecast and output. Hence, it can be calculated by subtracting the forecast from the output. Hence, the difference is 0 units.
Note: The calculation repeats for all the months.
Beginning inventory:
The initial inventory is given as 0. For the remaining months, ending inventory of previous month would be the beginning inventory of present month.
Ending inventory for the month of January:
Ending inventory can be determined by adding the beginning inventory and difference between output and forecast. Hence, the ending inventory is 20 units.
Ending inventory for the month of February:
Ending inventory can be determined by adding the beginning inventory and difference between output and forecast. Hence, the ending inventory is 20 units.
Ending inventory for the month of March:
Ending inventory can be determined by adding the beginning inventory and difference between output and forecast. Hence, the ending inventory is 20 units.
Note: The calculation repeats for all the months.
Average inventory for the month of January:
It is calculated by taking an average of beginning inventory and ending inventory. Hence, the average inventory is 10 units.
Average inventory for the month of February:
It is calculated by taking an average of beginning inventory and ending inventory. Hence, the average inventory is 20 units.
Average inventory for the month of March:
It is calculated by taking an average of beginning inventory and ending inventory. Hence, the average inventory is 20 units.
Note: The calculation repeats for all the months.
Calculate the regular time cost for the month of January:
Regular time cost per unit is given as $40 and regular time unit is given as 300. Regular time cost is calculated by multiplying regular time unit and regular time cost per unit. Hence, the regular time cost is $12,000.
Calculate the regular time cost for the month of February:
Regular time cost per unit is given as $40 and regular time unit is given as 300. Regular time cost is calculated by multiplying regular time unit and regular time cost per unit. Hence, the regular time cost is $12,000.
Calculate the regular time cost for the month of March:
Regular time cost per unit is given as $40 and regular time unit is given as 300. Regular time cost is calculated by multiplying regular time unit and regular time cost per unit. Hence, the regular time cost is $12,000.
Note: The calculation repeats for all the months.
Calculate the total regular time cost:
It is calculated by adding the regular time cost of all the months.
Hence, the total regular time cost is $72,000.
Calculate the overtime cost for the month of January:
Overtime cost per unit is given as $50 and overtime unit is given as 20. Overtime cost is calculated by multiplying overtime unit and overtime cost per unit. Hence, the overtime cost is $1,000.
Calculate the overtime cost for the month of February:
Overtime cost per unit is given as $50 and overtime unit is given as 20. Overtime cost is calculated by multiplying overtime unit and overtime cost per unit. Hence, the overtime cost is $1,000.
Calculate the overtime cost for the month of March:
Overtime cost per unit is given as $50 and overtime unit is given as 20. Overtime cost is calculated by multiplying overtime unit and overtime cost per unit. Hence, the overtime cost is $1,000.
Note: The calculation repeats for all the months.
Calculate the total overtime cost:
It is calculated by adding the overtime cost of all the months.
Hence, the total overtime cost is $6,000.
Calculate the subcontract cost for the month of January:
Subcontract cost per unit is given as $60 and subcontract unit is given as 0. Subcontract cost is calculated by multiplying subcontract unit and subcontract cost per unit. Hence, the subcontract cost is $0.
Calculate the subcontract cost for the month of February:
Subcontract cost per unit is given as $60 and subcontract unit is given as 0. Subcontract cost is calculated by multiplying subcontract unit and subcontract cost per unit. Hence, the subcontract cost is $0.
Calculate the subcontract cost for the month of March:
Subcontract cost per unit is given as $60 and subcontract unit is given as 0. Subcontract cost is calculated by multiplying subcontract unit and subcontract cost per unit. Hence, the subcontract cost is $0.
Note: The calculation repeats for all the months.
Calculate the total subcontract cost:
It is calculated by adding the subcontract cost of all the months.
Hence, the total subcontract cost is $0.
Calculate the inventory cost for the month of January:
It is calculated by average balance inventory cost and the average inventory units. Hence, the inventory cost is $100.
Calculate the inventory cost for the month of February:
It is calculated by average balance inventory cost and the average inventory units. Hence, the inventory cost is $200.
Calculate the inventory cost for the month of March:
It is calculated by average balance inventory cost and the average inventory units. Hence, the inventory cost is $200.
Note: The calculation repeats for all the months.
Calculate the total inventory cost:
It is calculated by adding the inventory cost of all the months.
Hence, the total inventory cost is $600.
Calculate the total cost of the plan:
It is calculated by adding the total regular time cost, overtime cost, subcontract cost, and inventory cost.
Hence, the total cost of the plan is $78,600.
b)

To compute: The total cost for each aggregate plan.
Introduction:The aggregate plan is the output of sales and operations planning. The major concern of aggregate planning is the production time and quantity for the intermediate future. Aggregate planning would encompass a time prospect of approximately 3 to 18 months.
Answer to Problem 1P
Explanation of Solution
Given information:
Regular output is $40, overtime is $50, subcontract is $60, and average balance inventory is $10.
In addition to this, the following information is given:
Month | July | August | September | October | November | December |
Forecast | 320 | 340 | 360 | 380 | 400 | 400 |
Regular | 300 | 300 | 300 | 300 | 300 | 300 |
Overtime | 20 | 20 | 20 | 20 | 30 | 30 |
Subcontract | 20 | 30 | 40 | 40 | 60 | 70 |
Determine the aggregate plan to compute total cost:
Month | July | August | September | October | November | December | Total | |
Forecast | 320 | 340 | 360 | 380 | 400 | 400 | 2,200 | |
Output | ||||||||
Regular | 300 | 300 | 300 | 300 | 300 | 300 | 1,800 | |
Part-time | ||||||||
Overtime | 20 | 20 | 20 | 20 | 30 | 30 | 140 | |
Subcontract | 20 | 30 | 40 | 40 | 60 | 70 | 260 | |
Difference | 20 | 10 | 0 | -20 | -10 | 0 | 0 | |
Inventory | ||||||||
Beginning | 0 | 20 | 30 | 30 | 10 | 0 | 90 | |
Ending | 20 | 30 | 30 | 10 | 0 | 0 | 90 | |
Average | 10 | 25 | 30 | 20 | 5 | 0 | 90 | |
Backlog | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |
Costs | ||||||||
Regular | 40 | $12,000 | $12,000 | $12,000 | $12,000 | $12,000 | $12,000 | $72,000 |
Part-time | ||||||||
Overtime | 50 | $1,000 | $1,000 | $1,000 | $1,000 | $1,500 | $1,500 | $7,000 |
Subcontract | 60 | $1,200 | $1,800 | $2,400 | $2,400 | $3,600 | $4,200 | $15,600 |
Hire/Layoff | ||||||||
Inventory | 10 | $100 | $250 | $300 | $200 | $50 | $0 | $900 |
Backorders | ||||||||
$14,300 | $15,050 | $15,700 | $15,600 | $17,150 | $17,700 | $95,500 |
Supporting calculation:
Forecast, regular time units, overtime, and subcontract units were given.
Calculate the difference of month July:
It is the calculation of difference between forecast and output. Hence, it can be calculated by subtracting the forecast from the output. Hence, the difference is 20 units.
Calculate the difference of month August:
It is the calculation of difference between forecast and output. Hence, it can be calculated by subtracting the forecast from the output. Hence, the difference is 10 units.
Calculate the difference of month September:
It is the calculation of difference between forecast and output. Hence, it can be calculated by subtracting the forecast from the output. Hence, the difference is 0 units.
Note: The calculation repeats for all the months.
Beginning inventory:
The initial inventory is given as 0. For the remaining months, ending inventory of previous month would be the beginning inventory of present month.
Ending inventory for the month of July:
Ending inventory can be determined by adding the beginning inventory and difference between output and forecast. Hence, the ending inventory is 20 units.
Ending inventory for the month of August:
Ending inventory can be determined by adding the beginning inventory and difference between output and forecast. Hence, the ending inventory is 20 units.
Ending inventory for the month of September:
Ending inventory can be determined by adding the beginning inventory and difference between output and forecast. Hence, the ending inventory is 20 units.
Note: The calculation repeats for all the months.
Average inventory for the month of July:
It is calculated by taking an average of beginning inventory and ending inventory. Hence, the average inventory is 10 units.
Average inventory for the month of August:
It is calculated by taking an average of beginning inventory and ending inventory. Hence, the average inventory is 25 units.
Average inventory for the month of September:
It is calculated by taking an average of beginning inventory and ending inventory. Hence, the average inventory is 30 units.
Note: The calculation repeats for all the months.
Calculate the regular time cost for the month of July:
Regular time cost per unit is given as $40 and regular time unit is given as 300. Regular time cost is calculated by multiplying regular time unit and regular time cost per unit. Hence, the regular time cost is $12,000.
Calculate the regular time cost for the month of August:
Regular time cost per unit is given as $40 and regular time unit is given as 300. Regular time cost is calculated by multiplying regular time unit and regular time cost per unit. Hence, the regular time cost is $12,000.
Calculate the regular time cost for the month of September:
Regular time cost per unit is given as $40 and regular time unit is given as 300. Regular time cost is calculated by multiplying regular time unit and regular time cost per unit. Hence, the regular time cost is $12,000.
Note: The calculation repeats for all the months.
Calculate the total regular time cost:
It is calculated by adding the regular time cost of all the months.
Hence, the total regular time cost is $72,000.
Calculate the overtime cost for the month of July:
Overtime cost per unit is given as $50 and overtime unit is given as 20. Overtime cost is calculated by multiplying overtime unit and overtime cost per unit. Hence, the overtime cost is $1,000.
Calculate the overtime cost for the month of August:
Overtime cost per unit is given as $50 and overtime unit is given as 20. Overtime cost is calculated by multiplying overtime unit and overtime cost per unit. Hence, the overtime cost is $1,000.
Calculate the overtime cost for the month of September:
Overtime cost per unit is given as $50 and overtime unit is given as 20. Overtime cost is calculated by multiplying overtime unit and overtime cost per unit. Hence, the overtime cost is $1,000.
Note: The calculation repeats for all the months.
Calculate the total overtime cost:
It is calculated by adding the overtime cost of all the months.
Hence, the total overtime cost is $6,000.
Calculate the subcontract cost for the month of July:
Subcontract cost per unit is given as $60 and subcontract unit is given as 20. Subcontract cost is calculated by multiplying subcontract unit and subcontract cost per unit. Hence, the subcontract cost is $1,200.
Calculate the subcontract cost for the month of August:
Subcontract cost per unit is given as $60 and subcontract unit is given as 30. Subcontract cost is calculated by multiplying subcontract unit and subcontract cost per unit. Hence, the subcontract cost is $1,800.
Calculate the subcontract cost for the month of September:
Subcontract cost per unit is given as $60 and subcontract unit is given as 40. Subcontract cost is calculated by multiplying subcontract unit and subcontract cost per unit. Hence, the subcontract cost is $2,400.
Note: The calculation repeats for all the months.
Calculate the total subcontract cost:
It is calculated by adding the subcontract cost of all the months.
Hence, the total subcontract cost is $15,600.
Calculate the inventory cost for the month of July:
It is calculated by average balance inventory cost and the average inventory units. Hence, the inventory cost is $100.
Calculate the inventory cost for the month of August:
It is calculated by average balance inventory cost and the average inventory units. Hence, the inventory cost is $250.
Calculate the inventory cost for the month of September:
It is calculated by average balance inventory cost and the average inventory units. Hence, the inventory cost is $300.
Note: The calculation repeats for all the months.
Calculate the total inventory cost:
It is calculated by adding the inventory cost of all the months.
Hence, the total inventory cost is $900.
Calculate the total cost of the plan:
It is calculated by adding the total regular time cost, overtime cost, subcontract cost, and inventory cost.
Hence, the total cost of the plan is $95,500.
c)

To compute: The total cost for each aggregate plan.
Introduction:The aggregate plan is the output of sales and operations planning. The major concern of aggregate planning is the production time and quantity for the intermediate future. Aggregate planning would encompass a time prospect of approximately 3 to 18 months.
Answer to Problem 1P
Explanation of Solution
Given information:
Regular output is $40, overtime is $50, subcontract is $60, and average balance inventory is $10.
In addition to this, the following information is given:
Month | July | August | September | October | November | December |
Forecast | 320 | 340 | 360 | 380 | 400 | 400 |
Regular | 350 | 350 | 350 | 350 | 350 | 350 |
Overtime | 0 | 0 | 0 | 0 | 0 | 0 |
It is given that subcontract can be used whenever necessary.
Determine the aggregate plan to compute total cost:
Month | July | August | September | October | November | December | Total | |
Forecast | 320 | 340 | 360 | 380 | 400 | 400 | 2,200 | |
Output | ||||||||
Regular | 350 | 350 | 350 | 350 | 350 | 350 | 2,100 | |
Part-time | ||||||||
Overtime | ||||||||
Subcontract | 50 | 50 | ||||||
Difference | 30 | 10 | -10 | -30 | 0 | 0 | 0 | |
Inventory | ||||||||
Beginning | 0 | 30 | 40 | 30 | 0 | 0 | 100 | |
Ending | 30 | 40 | 30 | 0 | 0 | 0 | 100 | |
Average | 15 | 35 | 35 | 15 | 0 | 0 | 100 | |
Backlog | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |
Costs | ||||||||
Regular | 40 | $14,000 | $14,000 | $14,000 | $14,000 | $14,000 | $14,000 | $84,000 |
Part-time | ||||||||
Overtime | 50 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
Subcontract | 60 | $0 | $0 | $0 | $0 | $3,000 | $3,000 | $6,000 |
Hire/Layoff | ||||||||
Inventory | 10 | $150 | $350 | $350 | $150 | $0 | $0 | $1,000 |
Backorders | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |
$14,150 | $14,350 | $14,350 | $14,150 | $17,000 | $17,000 | $91,000 |
Supporting calculation:
Forecast, regular time units, overtime, and subcontract units were given.
Calculate the difference of month July:
It is the calculation of difference between forecast and output. Hence, it can be calculated by subtracting the forecast from the output. Hence, the difference is 30 units.
Calculate the difference of month August:
It is the calculation of difference between forecast and output. Hence, it can be calculated by subtracting the forecast from the output. Hence, the difference is 10 units.
Calculate the difference of month September:
It is the calculation of difference between forecast and output. Hence, it can be calculated by subtracting the forecast from the output. Hence, the difference is -10 units.
Note: The calculation repeats for all the months.
Beginning inventory:
The initial inventory is given as 0. For the remaining months, ending inventory of previous month would be the beginning inventory of present month.
Ending inventory for the month of July:
Ending inventory can be determined by adding the beginning inventory and difference between output and forecast. Hence, the ending inventory is 30 units.
Ending inventory for the month of August:
Ending inventory can be determined by adding the beginning inventory and difference between output and forecast. Hence, the ending inventory is 40 units.
Ending inventory for the month of September:
Ending inventory can be determined by adding the beginning inventory and difference between output and forecast. Hence, the ending inventory is 20 units.
Note: The calculation repeats for all the months.
Average inventory for the month of July:
It is calculated by taking an average of beginning inventory and ending inventory. Hence, the average inventory is 15 units.
Average inventory for the month of August:
It is calculated by taking an average of beginning inventory and ending inventory. Hence, the average inventory is 35 units.
Average inventory for the month of September:
It is calculated by taking an average of beginning inventory and ending inventory. Hence, the average inventory is 35 units.
Note: The calculation repeats for all the months.
Calculate the regular time cost for the month of July:
Regular time cost per unit is given as $40 and regular time unit is given as 350. Regular time cost is calculated by multiplying regular time unit and regular time cost per unit. Hence, the regular time cost is $14,000.
Calculate the regular time cost for the month of August:
Regular time cost per unit is given as $40 and regular time unit is given as 350. Regular time cost is calculated by multiplying regular time unit and regular time cost per unit. Hence, the regular time cost is $14,000.
Calculate the regular time cost for the month of September:
Regular time cost per unit is given as $40 and regular time unit is given as 350. Regular time cost is calculated by multiplying regular time unit and regular time cost per unit. Hence, the regular time cost is $14,000.
Note: The calculation repeats for all the months.
Calculate the total regular time cost:
It is calculated by adding the regular time cost of all the months.
Hence, the total regular time cost is $84,000.
Calculate the overtime cost for the month of July:
Overtime cost per unit is given as $50 and overtime unit is given as 0. Overtime cost is calculated by multiplying overtime unit and overtime cost per unit. Hence, the overtime cost is $0.
Calculate the overtime cost for the month of August:
Overtime cost per unit is given as $50 and overtime unit is given as 0. Overtime cost is calculated by multiplying overtime unit and overtime cost per unit. Hence, the overtime cost is $0.
Calculate the overtime cost for the month of September:
Overtime cost per unit is given as $50 and overtime unit is given as 0. Overtime cost is calculated by multiplying overtime unit and overtime cost per unit. Hence, the overtime cost is $0.
Note: The calculation repeats for all the months.
Calculate the total overtime cost:
It is calculated by adding the overtime cost of all the months.
Hence, the total overtime cost is $0.
Calculate the subcontract cost for the month of July:
Subcontract cost per unit is given as $60 and subcontract unit is given as 0. Subcontract cost is calculated by multiplying subcontract unit and subcontract cost per unit. Hence, the subcontract cost is $0.
Calculate the subcontract cost for the month of August:
Subcontract cost per unit is given as $60 and subcontract unit is given as 0. Subcontract cost is calculated by multiplying subcontract unit and subcontract cost per unit. Hence, the subcontract cost is $0.
Calculate the subcontract cost for the month of September:
Subcontract cost per unit is given as $60 and subcontract unit is given as 0. Subcontract cost is calculated by multiplying subcontract unit and subcontract cost per unit. Hence, the subcontract cost is $0.
Note: The calculation repeats for all the months. As there are backlogs in the month of November and December, there would be 50 units of subcontracting in those months.
Calculate the total subcontract cost:
It is calculated by adding the subcontract cost of all the months.
Hence, the total subcontract cost is $15,600.
Calculate the inventory cost for the month of July:
It is calculated by average balance inventory cost and the average inventory units. Hence, the inventory cost is $150.
Calculate the inventory cost for the month of August:
It is calculated by average balance inventory cost and the average inventory units. Hence, the inventory cost is $350.
Calculate the inventory cost for the month of September:
It is calculated by average balance inventory cost and the average inventory units. Hence, the inventory cost is $350.
Note: The calculation repeats for all the months.
Calculate the total inventory cost:
It is calculated by adding the inventory cost of all the months.
Hence, the total inventory cost is $1,000.
Calculate the total cost of the plan:
It is calculated by adding the total regular time cost, overtime cost, subcontract cost, and inventory cost.
Hence, the total cost of the plan is $91,000.
Want to see more full solutions like this?
Chapter 11 Solutions
EBK OPERATIONS MANAGEMENT
- Sarah Anderson, the Marketing Manager at Exeter Township's Cultural Center, is conducting research on the attendance history for cultural events in the area over the past ten years. The following data has been collected on the number of attendees who registered for events at the cultural center. Year Number of Attendees 1 700 2 248 3 633 4 458 5 1410 6 1588 7 1629 8 1301 9 1455 10 1989 You have been hired as a consultant to assist in implementing a forecasting system that utilizes various forecasting techniques to predict attendance for Year 11. a) Calculate the Three-Period Simple Moving Average b) Calculate the Three-Period Weighted Moving Average (weights: 50%, 30%, and 20%; use 50% for the most recent period, 30% for the next most recent, and 20% for the oldest) c) Apply Exponential Smoothing with the smoothing constant alpha = 0.2. d) Perform a Simple Linear Regression analysis and provide the adjusted…arrow_forwardRuby-Star Incorporated is considering two different vendors for one of its top-selling products which has an average weekly demand of 70 units and is valued at $90 per unit. Inbound shipments from vendor 1 will average 390 units with an average lead time (including ordering delays and transit time) of 4 weeks. Inbound shipments from vendor 2 will average 490 units with an average lead time of 2 weeksweeks. Ruby-Star operates 52 weeks per year; it carries a 4-week supply of inventory as safety stock and no anticipation inventory. Part 2 a. The average aggregate inventory value of the product if Ruby-Star used vendor 1 exclusively is $enter your response here.arrow_forwardSam's Pet Hotel operates 50 weeks per year, 6 days per week, and uses a continuous review inventory system. It purchases kitty litter for $13.00 per bag. The following information is available about these bags: > Demand 75 bags/week > Order cost = $52.00/order > Annual holding cost = 20 percent of cost > Desired cycle-service level = 80 percent >Lead time = 5 weeks (30 working days) > Standard deviation of weekly demand = 15 bags > Current on-hand inventory is 320 bags, with no open orders or backorders. a. Suppose that the weekly demand forecast of 75 bags is incorrect and actual demand averages only 50 bags per week. How much higher will total costs be, owing to the distorted EOQ caused by this forecast error? The costs will be $higher owing to the error in EOQ. (Enter your response rounded to two decimal places.)arrow_forward
- Yellow Press, Inc., buys paper in 1,500-pound rolls for printing. Annual demand is 2,250 rolls. The cost per roll is $625, and the annual holding cost is 20 percent of the cost. Each order costs $75. a. How many rolls should Yellow Press order at a time? Yellow Press should order rolls at a time. (Enter your response rounded to the nearest whole number.)arrow_forwardPlease help with only the one I circled! I solved the others :)arrow_forwardOsprey Sports stocks everything that a musky fisherman could want in the Great North Woods. A particular musky lure has been very popular with local fishermen as well as those who buy lures on the Internet from Osprey Sports. The cost to place orders with the supplier is $40/order; the demand averages 3 lures per day, with a standard deviation of 1 lure; and the inventory holding cost is $1.00/lure/year. The lead time form the supplier is 10 days, with a standard deviation of 2 days. It is important to maintain a 97 percent cycle-service level to properly balance service with inventory holding costs. Osprey Sports is open 350 days a year to allow the owners the opportunity to fish for muskies during the prime season. The owners want to use a continuous review inventory system for this item. Refer to the standard normal table for z-values. a. What order quantity should be used? lures. (Enter your response rounded to the nearest whole number.)arrow_forward
- In a P system, the lead time for a box of weed-killer is two weeks and the review period is one week. Demand during the protection interval averages 262 boxes, with a standard deviation of demand during the protection interval of 40 boxes. a. What is the cycle-service level when the target inventory is set at 350 boxes? Refer to the standard normal table as needed. The cycle-service level is ☐ %. (Enter your response rounded to two decimal places.)arrow_forwardOakwood Hospital is considering using ABC analysis to classify laboratory SKUs into three categories: those that will be delivered daily from their supplier (Class A items), those that will be controlled using a continuous review system (B items), and those that will be held in a two bin system (C items). The following table shows the annual dollar usage for a sample of eight SKUs. Fill in the blanks for annual dollar usage below. (Enter your responses rounded to the mearest whole number.) Annual SKU Unit Value Demand (units) Dollar Usage 1 $1.50 200 2 $0.02 120,000 $ 3 $1.00 40,000 $ 4 $0.02 1,200 5 $4.50 700 6 $0.20 60,000 7 $0.90 350 8 $0.45 80arrow_forwardA part is produced in lots of 1,000 units. It is assembled from 2 components worth $30 total. The value added in production (for labor and variable overhead) is $30 per unit, bringing total costs per completed unit to $60 The average lead time for the part is 7 weeks and annual demand is 3800 units, based on 50 business weeks per year. Part 2 a. How many units of the part are held, on average, in cycle inventory? enter your response here unitsarrow_forward
- assume the initial inventory has no holding cost in the first period and back orders are not permitted. Allocating production capacity to meet demand at a minimum cost using the transportation method. What is the total cost? ENTER your response is a whole number (answer is not $17,000. That was INCORRECT)arrow_forwardRegular Period Time Overtime Supply Available puewag Subcontract Forecast 40 15 15 40 2 35 40 28 15 15 20 15 22 65 60 Initial inventory Regular-time cost per unit Overtime cost per unit Subcontract cost per unit 20 units $100 $150 $200 Carrying cost per unit per month 84arrow_forwardassume that the initial inventory has no holding cost in the first period, and back orders are not permitted. Allocating production capacity to meet demand at a minimum cost using the transportation method. The total cost is? (enter as whole number)arrow_forward
- MarketingMarketingISBN:9780357033791Author:Pride, William MPublisher:South Western Educational PublishingPractical Management ScienceOperations ManagementISBN:9781337406659Author:WINSTON, Wayne L.Publisher:Cengage,Purchasing and Supply Chain ManagementOperations ManagementISBN:9781285869681Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. PattersonPublisher:Cengage Learning

