Regular output capacity is 130 units per month. Regular cost per unit = K600. Overtime cost per unit K900. Beginning inventory is 0 units. We have the forecast of engine demand shown below: a) Develop a chase plan that matches the forecast. Calculate the cost of the plan. b) Develop a level plan that uses inventory to absorb fluctuations. Compare the costs of the level plan to the costs of the chase plan from Part (a). Inventory carrying cost per unit per month = 20. Backlog cost per unit per month = K900. There should be no backlog in the final month. Month Forecast 1 120 2 135 3 140 4 120 5 125 6 125 7 8 140 135 Total 1,040
Regular output capacity is 130 units per month. Regular cost per unit = K600. Overtime cost per unit K900. Beginning inventory is 0 units. We have the forecast of engine demand shown below: a) Develop a chase plan that matches the forecast. Calculate the cost of the plan. b) Develop a level plan that uses inventory to absorb fluctuations. Compare the costs of the level plan to the costs of the chase plan from Part (a). Inventory carrying cost per unit per month = 20. Backlog cost per unit per month = K900. There should be no backlog in the final month. Month Forecast 1 120 2 135 3 140 4 120 5 125 6 125 7 8 140 135 Total 1,040
Chapter19: Pricing Concepts
Section: Chapter Questions
Problem 6DRQ
Related questions
Question
![Question 3
Regular output capacity is 130 units per month. Regular cost per unit = K600. Overtime cost per unit
K900. Beginning inventory is 0 units. We have the forecast of engine demand shown below:
a) Develop a chase plan that matches the forecast. Calculate the cost of the plan.
b) Develop a level plan that uses inventory to absorb fluctuations. Compare the costs of the level
plan to the costs of the chase plan from Part (a). Inventory carrying cost per unit per month = 20.
Backlog cost per unit per month = K900. There should be no backlog in the final month.
Month
Forecast
1
120
2
3
135 140
4
120
End of assignment 1
5
125
6
125
7
140
=
8
135
Total
1,040](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F31211817-c6fc-40e1-a7a5-5f5383d5e7ea%2Faa3a2e6d-4d59-43e9-b525-5f66edb37152%2Fs09rj7w_processed.png&w=3840&q=75)
Transcribed Image Text:Question 3
Regular output capacity is 130 units per month. Regular cost per unit = K600. Overtime cost per unit
K900. Beginning inventory is 0 units. We have the forecast of engine demand shown below:
a) Develop a chase plan that matches the forecast. Calculate the cost of the plan.
b) Develop a level plan that uses inventory to absorb fluctuations. Compare the costs of the level
plan to the costs of the chase plan from Part (a). Inventory carrying cost per unit per month = 20.
Backlog cost per unit per month = K900. There should be no backlog in the final month.
Month
Forecast
1
120
2
3
135 140
4
120
End of assignment 1
5
125
6
125
7
140
=
8
135
Total
1,040
Expert Solution
![](/static/compass_v2/shared-icons/check-mark.png)
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 3 steps with 2 images
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)