Question
Month May Jun Jul Aug Sept Oct Total Forecast 60 60 70 90 90 80 ??? Production manager Yohanes has developed the following information. (Costs
Month | May | Jun | Jul | Aug | Sept | Oct | Total |
Forecast | 60 | 60 | 70 | 90 | 90 | 80 | ??? |
Production manager Yohanes has developed the following information. (Costs are in thousands of dollars.)
Regular production cost $1 per tankload
Regular production capacity 70 tankloads
Overtime production cost $1.5 per tankload
Subcontracting cost $1.8 per tankload
Holding cost $2 per tankload per month
Backordering cost Backlogs are not allowed
Beginning inventory 0 tankloads
Among the strategies being considered are the following:
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Level production supplemented by up to 10 tankloads a month from overtime.
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A combination of overtime, inventory, and subcontracting. Regular production should be the same each month.
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Using overtime for up to 15 tankloads a month, along with inventory to handle variations. Regular production should be the same each month.
Question
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The objective is to choose the plan that has the lowest cost. Which plan would you recommend?
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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.
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