Using an appropriate method plan the production

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Suppose that demand data for widgets made by XYZ Inc. is given below. Using an appropriate method (level , chase or mixed), plan the production (i.e. specify the production quantities and complete the table below) such that the total cost is made as small as possible. Regular time production capacity is 6000 units per month. Overtime production capacity is 3000 units per month. There is no other method of production. The cost of regular time work force is fixed and it does not depend on the amount produced and hence may be omitted in the cost calculations. Over time costs $5.00 per unit extra. Holding cost per unit per month is $6.00 (special facilities are needed to store and hence the high cost), and shortage cost is $1.00 per unit per month, (short units must be supplied at a later period, but within the 5 month planning horizon.) what is the total inventory holding cost (use ending inventory to calculate this cost), total shortage cost and the total cost of your plan? Try to find the “best” plan with the lowest total cost. September October November December January Demand 13000 9000 4000 8000 3000 Shortages from previous periods (0 if none) 0 Beginning Inventory 2000 Production (RT) Production (OT) Shipments Shortage Ending Inventory Should be at least 2000 Shortage cost Inventory holding cost OT production cost Total Production needed during the 5 months = ______________; Total capacity Available during the 5 months = _______________ Total cost of the Plan:

Reference no: EM131794384

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