Concept explainers
The Pigskin Company produces footballs. Pigskin must decide how many footballs to produce each month. The company has decided to use a six-month planning horizon. The
As indicated by the algebraic formulation of the Pigskin model, there is no real need to calculate inventory on hand after production and constrain it to be greater than or equal to demand. An alternative is to calculate ending inventory directly and constrain it to be nonnegative. Modify the current spreadsheet model to do this. (Delete rows 16 and 17, and calculate ending inventory appropriately. Then add an explicit non-negativity constraint on ending inventory.)
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Chapter 3 Solutions
Practical Management Science
- Barker Company produces and sells a single product with budgeted or standard costs as follows: Inputs Standards Direct materials 10 lbs at $10.00 per pound Direct labor 8 hours at $12.50 per hour Variable factory overhead 8 hours at $20.00 per hour Fixed factory overhead 8 hours at $40.00 per hour Overhead rates are based on 8,000 standard direct labor hours per month, i.e., this is the master budget denominator activity level. Desired ending inventories of materials are based on 10% of the next months materials needed. Desired ending finished goods are based on 5% of next periods budgeted unit sales. Unit Sales are budgeted as follows: January February March April 1,000 1,200 1,600 1,400 The budgeted sales price is $1000 per unit. Sales are budgeted as 80% credit sales and 20% cash sales. Past experience indicates that 60% of credit sales are collected during the month of sale, 38% are collected in the following month, and…arrow_forwardThis type of operational planning may cover the medium‐term needs of the business including budgeting, the purchasing and supply system and organisation thereof, purchasing and supply methods, negotiation and development of human resources. (1) Strategic level planning. (2) Tactical or middle‐management planning. (3) Operations level planning. (4) Operational planning. (5) Short‐term planning. This is in fact a production or operations scheduling system and not an inventory control system. It eliminates the holding of inventory and is based on requiring suppliers to deliver materials of the right quality to the business on the day they are needed and where they are needed. (1) Cyclical‐ordering system. (2) Materials‐requirements planning. (3) Just in time. (4) System of fixed‐order quantities. (5) Quick response system.arrow_forwardYou manage a production line that operates using a monthly production cycle. There are five different products that could be made this month. However, you only have 500 hours of line capacity, so you must be careful which products you select to make in the production cycle. Making a product incurs two types of setup costs: (1) a material “tear down” cost (measured in dollars) and (2) downtime for line preparation (measured in hours). Any quantity up to the forecasted monthly demand can be sold. Additional production details are given in the table below: Product 1 Product 2 Product 3 Product 4 Product 5 Monthly Demand 1000 units 1100 units 1700 units 1600 units 1500 units Revenue (per unit) $150 $175 $155 $200 $225 Production Cost (per unit) $60 $70 $60 $100 $110 Set Up Cost $10000 $15000 $25000 $10000 $5000 Set Up Time 25 hrs 15 hrs 0 hrs 10 hrs 30 hrs Production Time (per unit) .1 hrs .12…arrow_forward
- Company F needs to determine the amount of units to produce for the coming holiday season. They currently have 2,000 units in their beginning inventory. They are expecting a market demand of 18,000 units. Their ending inventory needs to be 20% of the current market demand. How many units do they need to produce for the holiday season?arrow_forwardBicycleBro is a retailer that sells bicycles. The company had been operating for 30 days (1 month). By the end of 1 month it wants to measure its performance in terms of Inventory turnover and Days of inventory. Below is the information that the company has collected from its warehouse and accounting department Stock Count Sheet Item code Stock on hand Stock count week (week number when employees counted the stock on hand) 100 30 week1 200 10 week1 100 10 week3 200 20 week3 Inventory valuation Item code Value per unit (in $) 100 1000 200 2000 Bicycles sold by end of month Item code Units sold 100 5 200 10 Given the information above find What is the total inventory turnover rate for given period? What is the total Inventory Days of Sales for given period?arrow_forwardA company wants to develop a level production plan for a family of products. Theopening inventory is 100 units, and an increase to 130 units is expected by the endof the plan. The demand for each month is given in what follows. Calculate the totalproduction, daily production, and production and ending inventory for each month.arrow_forward
- A company is known to have 4 request periods in 1 year. In the first quarter year demand amounted to 750, the 2nd quarter was 900, the third quarter was 1500, and for the fourth quarter it was 900. If the company has an initial inventory of 100, the desired final inventory is 150 units, the cost of normal hours is 100 rupiah/unit, the overtime hour fee is 125 rupiah/unit, the cost of sub-contract hours is 150 rupiah/unit, and lastly the cost of inventory is known to be 20 rupiah per unit per period. Here is the table of normal hours, overtime hours and subcontracts. Period Normal Hours Ovetime Hours Subcontracts 1 700 146 500 2 800 146 500 3 900 146 500 4 500 146 500 Please specify:a. Total cost!b. How much is produced per quarter?c. Analyze Your Answers!arrow_forwardProduction and Materials Purchases Budgets White Corporation’s budget calls for the following sales for next year:Quarter 1 90,000 units Quarter 3 68,000 unitsQuarter 2 76,000 units Quarter 4 96,000 unitsEach unit of the product requires 3 pounds of direct materials. The company’s policy is to begineach quarter with an inventory of product equal to 5% of that quarter’s estimated sales requirementsand an inventory of direct materials equal to 20% of that quarter’s estimated direct materials requirements for production.Required Determine the production and materials purchases budgets for the second quarter.arrow_forwardSuppose this information is available for PepsiCo, Inc. for 2015, 2016, and 2017. (in millions) 2015 2016 2017 Beginning inventory $ 2,100 $ 2,400 $ 2,300 Ending inventory 2,400 2,300 2,700 Cost of goods sold 18,227 20,071 20,478 Sales revenue 39,145 42,957 44,066 Calculate the days in inventory for PepsiCo, Inc. for 2015, 2016, and 2017. (Round days in inventory to 1 decimal place, e.g. 5.1.) 2015 2016 2017 Days in inventory daysarrow_forward
- Develop a production schedule to produce the exact production requirements by varying the workforce size for the following problem. Also, evaluate the cost of the schedule. The monthly forecasts for Product X for January, February, and March are 1,000, 1,500, and 1,200, respectively. Safety stock policy recommends that half of the forecast for that month be defined as safety stock. There are 22 working days in January, 19 in February, and 21 in March. Beginning inventory is 500 units. Manufacturing cost is $200 per unit, storage cost is $3 per unit per month (based on expected end-of-month levels), standard pay rate is $6 per hour, overtime rate is $9 per hour, cost of stock-out is $10 per unit per month, marginal cost of subcontracting is $10 per unit, hiring and training cost is $200 per worker, layoff cost is $300 per worker, and worker productivity is 0.1 unit per hour. Assume that you start off with 50 workers and that they work 8 hours per day. Note: Leave the cells blank,…arrow_forwardA company wants to develop a level production plan. The beginning inventory is zero. Demand for the next four periods is given in what follows. What production rate per period will give a zero inventory at the end of period 4? When and in what quantities will back orders occur? What level production rate per period will avoid back orders? What will be the ending inventory in period 4? Period 1 2 3 4 Total Forecast demand 9 5 9 9 Planned production Planned inventory 0arrow_forwardMax the Tailor is going to sell custom suits. He was able to rent a garage from his Uncle Ed for $2,000 a month, which includes utilities, and he already owns the equipment he needs. He anticipates being able to sell his suits for $500 each. The raw materials (fabric, buttons, zippers, thread, etc.) will cost an average of $75 for each suit, and he plans to spend $25 per suit to advertise them. Assuming these are all the costs and revenues, what will be Max’s monthly break-even point in units? Does this seem like a reasonable amount for him to produce and sell every month? Please show your calculations.arrow_forward
- Practical Management ScienceOperations ManagementISBN:9781337406659Author:WINSTON, Wayne L.Publisher:Cengage,