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Question
Table D.2
Bahouth Enterprises produces a variety of hookahs for clients around the globe. Their small plant has a highly flexible workforce that can switch between products seamlessly. They forecast using a six-month planning period and have a demand forecast as shown in the table. The per-unit costs for each output option the sales and operations planner has at his disposal are indicated in the table. Regular output costs $40 per unit, overtime production is $60 per unit, and subcontracting is $70 per unit. Holding inventory from one month to the next costs $2 per unit per month and a backlog costs $5 per unit per month. Regular plant capacity is 300 units per month.
| Period | 1 | 2 | 3 | 4 | 5 | 6 | Total | |
| Forecast | 400 | 350 | 500 | 400 | 500 | 200 | 2,350 | |
| Output | ||||||||
| Regular | $40 | 1,800 | ||||||
| Overtime | $60 | 0 | ||||||
| Subcontract | $70 | 0 | ||||||
| Inventory | ||||||||
| Beginning | 0 | |||||||
| Ending | $2 | |||||||
| Average | 0 | |||||||
| Backlog | $5 | 2,250 | ||||||
| Costs |
Use the information in Table D.2. The plant has no limits on the number of units produced by overtime or subcontractors and adopts a level plan strategy for the six-month planning period. What is the cost for month 6 of their level plan?
A) between $16,200 and $16,600
B) between $16,600 and $17,000
C) between $17,000 and $17,400
D) between $17,400 and $17,800
Answer
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