Zanda Corporation Is Preparing an Aggregate Production Plan for Its

question 27

Multiple Choice

Zanda Corporation is preparing an aggregate production plan for its product for the next four months. The company's expected monthly demand is given in the following chart. The company will have 100 units in inventory at the beginning of the month and wishes to maintain at least 100 units at the end of each month. Following is other critical data: Production cost per unit = $125
Inventory carrying cost per month per unit = $10 (based on ending month inventory)
Hiring cost per worker = $50
Firing cost per worker = $100
Beginning number of workers = 25
Each worker can produce 25 units per month. The total inventory carrying cost of a chase plan is:

• A)$6,000
• B)$4,000
• C)$5,000
• D)$4,500

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Definitions:

Elasticity of Demand

A measure of how much the quantity demanded of a good responds to a change in the price of that good, indicating the good's sensitivity to price changes.

City Revenues

The income generated by a municipality from sources like taxes, fees, and grants which is used to fund public services.

Income Elasticity

A measure of how much the demand for a product changes in relation to a change in consumers' incomes.

Luxuries

Items or services that are considered non-essential but desirable, typically associated with high quality and a higher price.