LMNO Gaskets has formulated a production plan for a product to meet demand over the upcoming four quarters. Demand in each of the four quarters and production, overtime, and subcontracting capacities are reported in the table below, in addition to the feasible production plan. The relevant costs are: • Regular time production cost is $10/unit. • Overtime production cost is $14/unit • Subcontracting cost is $18/unit. • Inventory is held at a cost of $1/unit/quarter. • Units may be backordered at a cost of $4/unit/quarter. Production Resource Regular Time Q1 Overtime Q1 Subcontract Q1 Regular Time Q2 Overtime Q2 Subcontract Q2 Regular Time Q3 Overtime Q3 Subcontract Q3 Demand in Quarter Demand in Quarter Q2 0 20 0 550 250 470 0 Q1 550 230 0 0 0 0 40 40 0 860 40 0 1330 What is the inventory cost for the year? What is the backorder cost for the year? What is the total cost for the year? Q3 0 0 0 0 0 30 510 160 0 700 What is the total overtime production cost for the year? Capacity 550 250 500 550 250 500 550 250 500
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- The total cost, excluding normal time labor costs, for Plan A = $. (Enter your response as a whole number.) Plan B: Vary the workforce to produce the prior month's demand. Demand was 1,300 units in June. The cost of hiring additional workers is $30 per unit produced. The cost of layoffs is $65 per unit cut back. (Enter all responses as whole numbers.) Note: Both hiring and layoff costs are incurred in the month of the change (i.e., going from production of 1,300 in July to 1000 in August requires a layoff (and related costs) of 300 units in August). Month 1 2 3 September 4 October July August 5 November 6 December Demand 1000 1200 1400 1800 1800 1800 Hire Production (Units) The total hiring cost = $ The total layoff cost = $ The total inventory carrying The total stockout cost = $ The total cost, excluding normal time labor costs, for Plan B = (Enter your response as a whole number.) (Enter your response as a whole number.) cost = $ (Enter your response as a whole number.) Layoff…The S&OP team at Ka nsas Furniture has received thefo llowing estimates of demand requirements: a) Assuming one-time stockout costs for lost sales of $ 100 perunit, inventory carrying costs of $25 per unit per month, andzero beginning and ending inventory, evaluate these two planson an incremental cost basis:• Plan A: Produce at a steady rate (equal to minimum requirements)of I ,000 units per month and subcontract additionalunits at a $60 per unit premium cost.• Plan B: Vary the workforce, to produce the prior month'sdemand. The fi rm produced I ,300 units in June. The cost ofhiring additional workers is $3,000 per 100 units produced.The cost of layoffs is $6,000 per l 00 units cut back.Nore: Both hiring and layoff costs are incurred in the month of thechange, (i.e., going from production of I ,300 in July to 1,000 inAugust requires a layofT [and related costs] of 300 units in August,j ust as…Demand for stereo headphones and MP3 players for joggers has caused Nina Industries to grow almost 50 percent over the past year. The number of joggers continues to expand, so Nina expects demand for headsets to also expand, because, as yet, no safety laws have been passed to prevent joggers from wearing them. Demand for the players for last year was as follows: MONTH DEMAND (UNITS) January 4,000 February 4,100 March 3,800 April 4,200 May 4,850 June 4,500 July 5,150 August 4,750 September 5,250 October 5,550 November 6,150 December 5,850 a. Using linear regression analysis, what would you estimate demand to be for each month next year? Using a spreadsheet, follow the general format in Exhibit 3.7. (picture below)(Do not round intermediate calculations. Round your answers to 2 decimal places.) Month Forecast january february march april may june july august september october november december b. To…
- Demand for stereo headphones and MP3 players for joggers has caused Nina Industries to grow almost 50 percent over the past year. The number of joggers continues to expand, so Nina expects demand for headsets to also expand, because, as yet, no safety laws have been passed to prevent joggers from wearing them. Demand for the players for last year was as follows: MONTH DEMAND (UNITS) January 4,000 February 4,100 March 3,800 April 4,200 May 4,850 June 4,500 July 5,150 August 4,750 September 5,250 October 5,550 November 6,150 December 5,850 a. Using linear regression analysis, what would you estimate demand to be for each month next year? Using a spreadsheet, follow the general format in Exhibit 3.7. (picture below)(Do not round intermediate calculations. Round your answers to 2 decimal places.) Month Forecast january february march april may june july august september october november decemberA. What are some sources of demand variation B. Describe three classical strategies for capacity and demand planning and managementEastman Publishing company is considering publishing a paperback textbook on spreadsheet applications for business. The fixed cost of manuscript preparation, textbook design, and production setup is estimated to be P160,000. Variable production and materials costs are estimated to be P6 per book. The publisher plans to sell the text to college and university bookstores for P46 each. A. What is the break-even point? B. What profit or loss can be anticipated with a demand of 3,800 copies? C. With a demand of 3,800 copies, what is the minimum price per copy that the publisher must change to break-even? D. If the publisher believes that the price per copy coud be increase to P50.95 and not affected the anticipated demand of 3,800 copies, what action would you recommend? What profit or loss can be anticipated?
- Demand for stereo headphones and MP3 players for joggers has caused Nina Industries to grow almost 50 percent over the past year. The number of joggers continues to expand, so Nina expects demand for headsets to also expand, because, as yet, no safety laws have been passed to prevent joggers from wearing them. Demand for the players for last year was as follows: MONTH DEMAND (UNITS) January February 4,100 4,200 March 3,900 April 4,300 May 4,900 June 4,600 July 5,200 August 4,800 September 5,300 October 5,600 November 6,200 December 5,900APP Trial and Error -- Level Production Given the following forecasted demands with no capacity limits and no beginning inventory: Quarter Demand 200 900 1 234 Trial and Error is to be used to determine a production plan with a Level Production strategy. How many units will be produced by Regular Production in the 1st quarter? O.200 O 300 400 500 600 800 500 O 700Basil's Framing manufactures picture frames in one workshop, which has a practical capacity of 40,000 frames. The variable cost of a frame is $24 per unit, and the fixed costs of the workshop are $392,000 annually. Current annual demand is 28,000 frames. Basil's Framing bought the current workshop because of forecasts that demand for the frames would grow. Required: a. What cost per frame should the cost system report to facilitate management decision making?
- Nozone, Inc., a manufacturer of Freon recovery units (for automotive air conditioner maintenance), experiences a strongly seasonal demand pattern, driven by the summer air conditioning season. This year Nozone has put together a six-month production plan, where the monthly demands D, for recovery units are given in the table below. Each recovery unit is manufactured from one chassis assembly plus a variety of other parts. The chassis assemblies are produced in the machining center. Since there is a single chassis assembly per recovery unit, the demands in the table below also represent demands for chassis assemblies. The unit cost, fixed setup cost and monthly holding cost for chassis assemblies are also given in this table. The fixed setup cost is the firm's estimate of the cost to changeover the machining center to produce chassis assemblies, including labor and materials cost and the cost of disruption of other product lines. t D₁ C₁ A₁ h₂ 1 1,000 50 2,000 1 2 1,200 50 2,000 1 3 500…Table below provides the demand forecast and production day information for an aggregate plan. Assume that no back orders are allowed in this case. Month January February March April May June Demand Forecast 3,000 4,500 3,400 2,500 4,000 3,200 Production Days 22 18 21 21 22 20 The costing information that is used to evaluate the total cost of each plan is as follows:• Inventory carrying cost: $4 per unit per month• Subcontracting cost per unit: $15 per unit• Working hours: 8 hours per day• Average pay rate: $12 per hour ($96 per day per worker)• Labour-hours to produce a unit: 2 hours per unit• Cost of increasing daily production rate (hiring and training): $300 per unit• Cost of decreasing daily production rate (layoffs): $700 per unitUse these information to formulate an aggregate plan. The firm would like to use level strategy: constant workforce for the aggregate planning. The firm chooses the average demand of the…The S&OP team at Kansas Furniture, has received estimates of demand requirements as shown in the table. Assuming one-time stockout costs for lost sales of $125 per unit, inventory carrying costs of $30 per unit per month, and zero beginning and ending inventory, evaluate the following plan on an incremental cost basis: Plan A: Produce at a steady rate (equal to minimum requirements) of 1,000 units per month and subcontract additional units at a $60 per unit premium cost. Subcontracting capacity is limited to 800 units per month. (Enter all responses as whole numbers). Subcontract Ending Demand Production Inventory Month 1 July (Units) 1000 1,000 2 August 1200 1,000 3 September 1400 1,000 4 October 1800 1,000 5 November 1800 1,000 6 December 1600 1,000 Overtime Capacity Subcontract Cap Month Demand Regular Time Capacity July August 1200 September October 1800 1000 800 1,000 1,000 800 1400 1,000 800 1,000 800 November 1800 1,000 800 December 1600 1,000 800