Scenario 8 The Labor Contract at the Plant Prohibits Both Overtime and Problem

question 12

Multiple Choice

Scenario 8.2 - Willow
A company faces the aggregate planning problem shown in the table below.Cost of regular production is $8 per unit,the cost of producing the same unit on overtime is $15,the cost of subcontracting is $12 per unit,and the cost of carrying a unit in inventory from one month to the next is $6.
$$\begin{array} { | l | c | c | c | c | c | } \hline & \text { January } & \text { February } & \text { March } & \text { April } & \text { May } \\\hline \text { Forecast } & 400 & 800 & 1200 & 700 & 300 \\\hline \text { Beginning Inventory } & 100 & & & & \\\hline \text { Regular Time } & & & & & \\\hline \text { Overtime } & & & & & \\\hline \text { Subcontracting } & & & & & \\\hline \text { Ending Inventory } & & & & & \\\hline\end{array}$$ The labor contract at the plant prohibits both overtime and subcontracting output to exceed 400 units in any five-month window.The plant capacity is 20 units per day produced using two shifts and the plant runs seven days a week.By policy,management wants to avoid stockouts.
-Without actually solving the aggregate planning problem,it is safe to conclude that in the optimal solution to Scenario 8.2,

• A)the total ending inventory will exceed the number of units made using overtime.
• B)the number of units made using subcontracting will exceed the number of units made using overtime.
• C)the number of units made using regular time will exceed the forecast.
• D)the number of units made using subcontracting will exceed the number of units made using regular time.

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Definitions:

Petty Cash Account

A small amount of cash kept on hand for minor or incidental expenses, managed through a specified fund.

Purpose

The reason for which something is done or created or for which something exists.

General Journal Entry

A general journal entry is a record of financial transactions that includes details such as date, accounts impacted, amounts, and a brief description of the transaction.

Petty Cash Fund

A petty cash fund is a small amount of cash on hand used for paying expenses too small to merit writing a check or using a credit card.