Develop as well as complete the total cost for each plan. Compute the plan which has the lowest total cost.
Now Juice Inc., produces bottled pomegranate juice. A planner has developed an aggregate forecast for demand (in cases) for the next six months.
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Month:
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May
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June
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July
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Aug.
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Sept.
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Oct.
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Forecast
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4,000
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48,000
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5,600
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7,200
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6,400
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5,000
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Use the subsequent information to develop aggregate plans.
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Regular production cost
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$10 per case
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Regular production capacity
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5,000 cases
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Overtime production cost
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$16 per case
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Subcontracting cost
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$20 per case
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Holding cost
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$1 per case per month
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Beginning inventory
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0
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Develop as well as aggregate plan using each of the following guidelines and complete the total cost for each plan. Which plan has the lowest total cost?
a. Use level production. Supplement using overtime as needed.
b. Use a grouping overtime (500 cases per period maximum), inventory and subcontracting (500 cases per period maximum) to handle variations in demand.
c. Use overtime up to 750 cases per period as well as inventory to handle variations in demand.