Evaluate the existing capacity against seasonal demand

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Reference no: EM133679914

Question

Analyze and Evaluate the existing capacity against seasonal demand as a function of under-utilization or overcapacity. Considering this "Manufacturers that experience seasonal patterns in demand, open build-up inventory during the off-season to meet high demand during the peak season. Seasonal Inventory. Inventory: 10,000 units at $5 holding cost per unit per month.

? Ordering: Average order cost is $100 for 2,000 units.

? Operating Schedule: 300 days per year.

? Manufacturing: 7 steps with specified cycle times, 10% defect rate, and a $15 rework cost per defective unit.

? Demand: Seasonal variance with 500 units/day at peak and 150 units/day at trough.

? Production: Maximum capacity is 400 units/day.

? Costs: Fixed costs at $600,000/year, variable cost at $250/unit, and selling price at $500/unit.

Reference no: EM133679914

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