On Saturday, Feb 27, the FDA issued approval for Johnson and Johnson's COVID-19 vaccine. The federal government has paid Johnson & Johnson 2 billion dollars to research and develop the vaccine. The federal government has pre-ordered the vaccine at $10 per dose. Johnson & Johnson has promised the federal government a supply of 100 million doses of the vaccine by the end of June. Everything stated above is true. Nothing about this problem is fabricated. Regular-time production is limited to 22 million doses per month Any additional production is met using overtime. Overtime production is limited to 4 million doses per month. If regular time and overtime production can not satisfy the monthly demand, then backorders will occur. Regular-time production cost is $10 per dose. Overtime production cost is $12 per dose. Inventory carrying cost is $3 per dose per month and is based on AVERAGE inventory. Backorder cost is $5 per dose per month. Johnson & Johnson has 4 million doses on hand at the beginning of March and must have 8 million doses on hand at the end of June as safety stock. USE A CHASE PRODUCTION STRATEGY TO DETERMINE A PRODUCTION PLAN FOR Johnson & Johnson. Keep in mind that a CHASE strategy may not be feasible, meaning you may not be able to meet all demand. Also, backorders from one period are to be shipped in the next period. That may create a backorder for the demand in that next period. Fill in the tables below. All numbers are in millions. April May June March 4 Beginning Inventory* Total Required Production Regular-Time Production Overtime Production Demand Ending Inventory** Average Inventory*** 8 38 44 6 Regular-Time Production Cost Overtime Production Cost Inventory Cost Backorder Cost * If backorders occurred at the end of the previous period, indicate beginning inventory as a negative number ** If backorders occur at the end of the month, indicate them as negative ending inventory *** When computing average inventory, if either beginning and/or ending inventory is negative, use zero instead of the negative value. What is the grand total cost of a chase strategy, in dollars? For this problem, why is a level strategy better than a chase strategy? Write your answer here: On Saturday, Feb 27, the FDA issued approval for Johnson and Johnson's COVID-19 vaccine. The federal government has paid Johnson & Johnson 2 billion dollars to research and develop the vaccine. The federal government has pre-ordered the vaccine at $10 per dose. Johnson & Johnson has promised the federal government a supply of 100 million doses of the vaccine by the end of June. Everything stated above is true. Nothing about this problem is fabricated. Regular-time production is limited to 22 million doses per month Any additional production is met using overtime. Overtime production is limited to 4 million doses per month. If regular time and overtime production can not satisfy the monthly demand, then backorders will occur. Regular-time production cost is $10 per dose. Overtime production cost is $12 per dose. Inventory carrying cost is $3 per dose per month and is based on AVERAGE inventory. Backorder cost is $5 per dose per month. Johnson & Johnson has 4 million doses on hand at the beginning of March and must have 8 million doses on hand at the end of June as safety stock. USE A CHASE PRODUCTION STRATEGY TO DETERMINE A PRODUCTION PLAN FOR Johnson & Johnson. Keep in mind that a CHASE strategy may not be feasible, meaning you may not be able to meet all demand. Also, backorders from one period are to be shipped in the next period. That may create a backorder for the demand in that next period. Fill in the tables below. All numbers are in millions. April May June March 4 Beginning Inventory* Total Required Production Regular-Time Production Overtime Production Demand Ending Inventory** Average Inventory*** 8 38 44 6 Regular-Time Production Cost Overtime Production Cost Inventory Cost Backorder Cost * If backorders occurred at the end of the previous period, indicate beginning inventory as a negative number ** If backorders occur at the end of the month, indicate them as negative ending inventory *** When computing average inventory, if either beginning and/or ending inventory is negative, use zero instead of the negative value. What is the grand total cost of a chase strategy, in dollars? For this problem, why is a level strategy better than a chase strategy? Write your answer here
