Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Right now is July 1, 2021. You would like to construct an aggregate production plan for product PX34 for the four quarters of 2022.
Right now is July 1, 2021. You would like to construct an aggregate production plan for product PX34 for the four quarters of 2022. Cost of regular production = 69 $/u. Cost of overtime production = 99 $/u. Inventory holding cost = 1.3 $/u/qtr. Cost of increasing regular production = Cost of decreasing regular production = 40 $/u. 50 $/u. The regular production in Quarter 4 of 2021 is 634 u. The inventory a the beginning of Quarter 1 of 2022 is estimated to be 44 u. The forecasted demand for the four quarters of 2022 are: 740, 574, 515, and 570 units. You want to use the level production strategy with overtime production. Furthermore, you will keep inventory as low as possible but shortage must be avoided. Suppose you keep the quarterly regular production constant at 689 units and add overtime production if necessary. You must perform the needed calculation and answer the question shown below. The total cost of holding inventory will be ? dollars.
Step by Step Solution
★★★★★
3.42 Rating (161 Votes )
There are 3 Steps involved in it
Step: 1
To calculate the total cost of holding inventory we need to consider the inventory levels at the beg...Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started