A Company Has the Cost Structure Shown in the Table

question 72

True/False

A company has the cost structure shown in the table and faces a demand in July that exceeds capacity by 200 units. They enter June with an inventory of zero and a demand equal to capacity. Their best course of action in order to completely fill all of the orders for both June and July by the end of July is to subcontract the extra 200 units in June and hold the inventory one period for July's demand.
$$\begin{array} { | l | c | } \hline { \text { Managerial Lever } } & \text { Cost } \\\hline \text { Regular production } & \$ 1,000 / \text { unit } \\\hline \text { Overtime production } & \$ 1300 / \text { unit } \\\hline \text { Subcontracting } & \$ 1200 / \text { unit } \\\hline \text { Inventory holding } & \$ 100 / \text { unit/month } \\\hline \text { Backlog cost } & \$ 400 / \text { unit/month } \\\hline\end{array}$$

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Definitions:

Group Cohesiveness

The extent to which members of a group feel bonded or united towards achieving a common goal.

Societal System

A complex network of institutions, structures, and relationships that make up a society.

Influence Process

The methods or strategies used by individuals or groups to affect the behaviors or attitudes of others.

Leadership

The act of guiding and directing a group towards achieving a common goal through influence, vision, and motivation.