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Question 3 25 pts Acme Company's demand over the planning horizon is expected to be as follows: Month 1 3 5 Demand 27,500 27,000 26,000

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Question 3 25 pts Acme Company's demand over the planning horizon is expected to be as follows: Month 1 3 5 Demand 27,500 27,000 26,000 26,500 28,000 Regular production cost is $7 per unit. Regular production capacity is 25,000 units, beyond which, the company must subcontract, at a cost of $8 per unit. Carrying cost is $1.50 per unit per period (based on ending inventory each period, not average inventory) and there is a shortage cost of $3.00 per unit per period. a) Using a level production strategy, what is the total planning costs (rounded to nearest dollar) over the 5 periods? Finish the planning period with zero ending inventory. dollars b) Using a chase strategy, what is the total planning costs (rounded to nearest dollar) over the 5 periods? Finish the planning period with zero ending inventory. dollars c) Which strategy is the better plan? Enter Level or Chase d) If you employ the best strategy from partc (above), how much will ACME save? dollars

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