Question

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 Forecast Total 250 300 250 3002802752701,925 4 7

Answer 1

Solution :

A : Chase Plan :

Period 7 Total Demand 250 300 250 300 280 270 1,925 Output Regular Overtime Subcontract 250 250 275 275 250 1,850 75 20 Output- Forecast Invento Beginning Invento Ending Invento Average Invento Backorders Costs Regular Overtime Subcontract Inventory Holding Hiring 10,000 11,000 1,500 10,000 11,000 1,500 11,000 300 11,000 10,00074,000 4,500 1,200 TOTAL COSTS 10,000 12,500 10,000 12,500 11,300 11,000 11,200 78,500

B : Plan with subcontracting and inventory :

Period 1 7 Total Demand 250 300 250 300 280 275 270 1,925 Output Regular Overtime Subcontract 275 275 275 275 275 275 250 1,900 20 25 Output- Forecast Invento Beginning Invento Ending Invento Average Invento 25 25 13 13 13 13 Backorders Costs Regular Overtime Subcontract Inventory Holding Hiring 11,000 11,000 11,000 11,000 11,000 11,000 10,00076,000 250 1,000 1,250 100 TOTAL COSTS 11,050 11,000 11,050 11,000 11,250 11,000 11,00077,350