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Aggregate demand for a product family is given in the table below for the upcoming four quarters. The production strategy is level production, in
Aggregate demand for a product family is given in the table below for the upcoming four quarters. The production strategy is level production, in which the same amount is produced in each quarter: The cost of increasing production from one quarter to the next is accounted for at $30/unit of increase and the cost of decreasing production from one quarter to the next is accounted for at $10/unit of decrease. The per unit cost of production is $45/unit. The inventory cost is $20/unit/quarter. Demand that cannot be met is a lost sale which is accounted for at $40/unit. Compute the total cost for the year (i.e. do not include the costs for the 4 quarters of the preceding year). For level production, the production level is computed as: (Total Demand - Initial Inventory)/number periods. Quarter Demand Production Ending Lost Production Production Inventory Sale Increase Decrease Prior 300 320 Q1 40 Q2 720 Q3 680 Q4 880 What is the total of the quarterly increases in production for the four quarters? What is the total of the quarterly decreases in production? for the four quarters? What is the total of the quarterly ending inventory levels for the four quarters? What is the total of the quarterly lost sale levels for the four quarters? What is the total cost for the four quarters?
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