CASE

EIGHT GLASSES A DAY $($EGAD$)$

The EGAD Bottling Company has decided to introduce a new line of premium bottled water that will include several "designer" flavors. Marketing manager Georgianna Mercer is predicting an upturn in demand based on the new offerings and the increased public awareness of the health benefits of drinking more water. She has prepared aggregate forecasts for the next six months, as shown in the following table $($quantities are in tankloads$).$

$\backslash$table$[[$Month$,$May,Jun,Jul,Aug,Sept,Oct,Total$],[$Forecast$,50,60,70,90,80,70,420]]$

Production manager Mark Mercer $($no relation to Georgianna$)$ has developed the following information. $($Costs are in thousands of dollars.$)$

$\backslash$table$[[$Regular production cost,$$1$ per tankload$],[$Regular production capacity,$60$ tankloads$],[$Overtime production cost,$$1\mathrm{.}6$ per tankload$],[$Subcontracting cost$,$$$1\mathrm{.}8$ per tankload$],[$Holding cost$,$$$2$ per tankload per month$]]$

Backordering cost

Beginning inventory

Among the strategies being considered are the following:

Level production supplemented by up to $10$ tankloads a month from overtime.

A combination of overtime, inventory, and subcontracting. Regular production should be the same each month.

Using overtime for up to $15$ tankloads a month, along with inventory to handle variations. Regular production should be the same each month.

Question

The objective is to choose the plan that has the lowest cost. Which plan would you recommend?

Presumably, information about the new line has been shared with supply chain partners. Explain what information should be shared with various partners, and why sharing that information is important.

Backlogs are not allowed

$0$ tankloads

CASE

EIGHT GLASSES A DAY $($EGAD$)$

The EGAD Bottling Company has decided to introduce a new line of premium bottled water that will include several "designer" flavors. Marketing manager Georgianna Mercer is predicting an upturn in demand based on the new offerings and the increased public awareness of the health benefits of drinking more water. She has prepared aggregate forecasts for the next six months, as shown in the following table $($quantities are in tankloads$).$

$\backslash$table$[[$Month$,$May,Jun,Jul,Aug,Sept,Oct,Total$],[$Forecast$,50,60,70,90,80,70,420]]$

Production manager Mark Mercer $($no relation to Georgianna$)$ has developed the following information. $($Costs are in thousands of dollars.$)$

$\backslash$table$[[$Regular production cost,$$1$ per tankload$],[$Regular production capacity,$60$ tankloads$],[$Overtime production cost,$$1\mathrm{.}6$ per tankload$],[$Subcontracting cost$,$$$1\mathrm{.}8$ per tankload$],[$Holding cost$,$$$2$ per tankload per month$]]$

Backordering cost

Beginning inventory

Among the strategies being considered are the following:

Level production supplemented by up to $10$ tankloads a month from overtime.

A combination of overtime, inventory, and subcontracting. Regular production should be the same each month.

Using overtime for up to $15$ tankloads a month, along with inventory to handle variations. Regular production should be the same each month.

Question

The objective is to choose the plan that has the lowest cost. Which plan would you recommend?

Presumably, information about the new line has been shared with supply chain partners. Explain what information should be shared with various partners, and why sharing that information is important.

Backlogs are not allowed

$0$ tankloads