Problem 11-6

Manager Chris Channing of Fabric Mills, Inc., has developed the forecast shown in the table for bolts of cloth. The figures are in hundreds of bolts. The department has a normal capacity of 275(00) bolts per month, except for the seventh month, when capacity will be 250(00) bolts. Normal output has a cost of $40 per hundred bolts. Workers can be assigned to other jobs if production is less than normal. The beginning inventory is zero bolts.

Month	1	2	3	4	5	6	7	Total
Forecast	250	300	250	300	280	275	270	1,925

a.	Develop a chase plan that matches the forecast and compute the total cost of your plan. Overtime is $60 per hundred bolts. (Negative amounts should be indicated by a minus sign. Leave no cells blank - be certain to enter "0" wherever required. Omit the "$" sign in your response.)

Period	1	2	3	4	5	6	7	Total
Forecast	250	300	250	300	280	275	270	1,925
Output
Regular
Overtime
Subcontract
Output - Forecast
Inventory
Beginning
Ending
Average
Backlog
Costs:
Output
Regular	$							$
Overtime
Subcontract
Inventory
Backorder
Total	$							$

b.

Would the total cost be less with regular production with no overtime, but using a subcontractor to handle the excess above normal capacity at a cost of $50 per hundred bolts? Backlogs are not allowed. The inventory carrying cost is $2 per hundred bolts. (Round your Average values to 1 decimal place. Negative amounts should be indicated by a minus sign. Leave no cells blank - be certain to enter "0" wherever required. Omit the "$" sign in your response.)

Period	1	2	3	4	5	6	7	Total
Forecast	250	300	250	300	280	275	270	1,925
Output
Regular
Overtime
Subcontract
Output - Forecast
Inventory
Beginning
Ending
Average
Backlog
Costs:
Regular	$							$
Overtime
Subcontract
Inventory
Backorder
Total	$							$