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Can you explain why the regular output is 2500 for all the periods even though some don't exceed the max capacity of 2500? Why is
Can you explain why the regular output is 2500 for all the periods even though some don't exceed the max capacity of 2500? Why is overtime 600 for every period?
Use the information below to work all the problems in this section. Work the problem very carefully and pay attention to the details. Values build on values so once you make a mistake, it is likely that all the following values will be incorrect. Demand for the next six periods: 2,000; 2,000; 3,500; 4,000; 5,000; 2,100 Maximum regular time production: 2,500 Maximum overtime production: 2,000 They use the level strategy. If there is not enough production capacity to meet demand, they will use backorders to deal with the situation. The following costs are per unit: Regular time: $4.00 Overtime: $7.50 Inventory per period: $2.85 Backorders: $20.00 Develop the aggregate plan. \begin{tabular}{|l|r|r|r|r|r|r|r|} \hline Period & 1 & 2 & 3 & 4 & 5 & 6 & Total \\ \hline Forecast & 2,000 & 2,000 & 3,500 & 4,000 & 5,000 & 2,100 & 18,600 \\ \hline Output & & & & & & \\ \hline Regular & 2,500 & 2,500 & 2,500 & 2,500 & 2,500 & 2,500 & 15,000 \\ \hline Overtime & 600 & 600 & 600 & 600 & 600 & 600 & 3,600 \\ \hline Inventory & & & & & & \\ \hline Beginning & 0 & 1100 & 2200 & 1800 & 900 & 0 & \\ \hline Ending & 1100 & 2200 & 1800 & 900 & 0 & 0 & \\ \hline Average & 550 & 1650 & 2000 & 1350 & 450 & 0 & 6,000 \\ \hline Backorder & 0 & 0 & 0 & 0 & 1000 & 0 & 1,000 \\ \hline & & & & & & \\ \hline Cost & $10,000 & $10,000 & $10,000 & $10,000 & $10,000 & $10,000 & $60,000 \\ \hline Regular & $4,500 & $4,500 & $4,500 & $4,500 & $4,500 & $4,500 & $27,000 \\ \hline Overtime & $1,567.5 & $4,702.5 & $5,700.0 & $3,847.5 & $1,282.5 & $0.0 & $17,100.0 \\ \hline Inventory & $0 & $0 & $0 & $0 & $20,000 & $0 & $20,000 \\ \hline Backorder & $16,068 & $19,203 & $20,200 & $18,348 & $35,783 & $14,500 & $124,100 \\ \hline Total & & & & & & & \end{tabular}Step by Step Solution
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