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Aggregate demand for a product family is given in the table below for the 4 quarters of the preceding year. The production strategy is level
Aggregate demand for a product family is given in the table below for the quarters of the preceding year. The production strategy is level production, in which the same amount is produced in each quarter. Pertinent details are:
The per unit cost of production is $unit
Inventory is held at a cost of $unitquarter
Up tp units can be subcontracted in any quarter at a cost of $unit
Demand that cannot be met from production and inventory and subcontracting is a lost sale which is accounted for at $unit
Compute the levels of ending inventory, subcontracting, and lost sales for the four quarters. Then compute the total cost. For level production, the production level is computed as: Total Demand Initial Inventorynumber periods.
Quarter Demand Production Ending Inventory Subcontract Lost Sales
Prior
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What is the total of the quarterly ending inventory levels for the year?
What is the total of the quarterly subcontracted levels for the year?
What is the total of the quarterly lost sale levels for the year?
What is the total cost for the year?
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