The Academic Company Mixes and Bottles a High-Energy Beverage in Various

question 74

Multiple Choice

The Academic Company mixes and bottles a high-energy beverage in various container types and sizes for college students. The aggregate forecast for the next four quarters (1 year) in thousands of gallons is as follows:
Table 1
$$\begin{array} { | l | l | } \hline \text { QUARTER } & \begin{array} { l } \text { FORECAST DEMAND PER } \\1,000 \text { GALLONS }\end{array} \\\hline 1 & 400 \\\hline 2 & 700 \\\hline 3 & 850 \\\hline 4 & 650 \\\hline \text { TOTAL: } & 2,600 \\\hline\end{array}$$
Academic's management makes the following assumptions:
$\bullet$ Each employee works 550 standard hours of regular time each quarter.
$\bullet$ On average, it takes 27 hours to produce and package 1 unit (1,000 gallons) .
$\bullet$ Regular-time labor costs $6.00/hour; overtime labor costs $9.00/hour.
$\bullet$ Inventory-holding cost is approximately $4.50/unit (1,000 gallons) per quarter based upon the ending inventory per quarter.
$\bullet$ Because of extremely hot weather, there is no beginning inventory available to start Quarter 1.
$\bullet$ Management wants a constant work force (no hiring or firing) .
$\bullet$ Managers have also decided to always round up the number of employees needed to the next whole integer, i.e., 37.2 yields 38 employees.
______________________________________________________________________________
-Using the data in Table 1, if management will allow a maximum of 30 percent overtime, how many workers are needed for Quarter 3?

• A) 29
• B) 33
• C) 35
• D) 40

---

Definitions:

Covenants

Legally binding promises or agreements within contracts that stipulate actions that must be performed or refrained from by one or more parties.

Landlord and Tenant

The legal relationship between the owner of a property (landlord) and an individual or entity that rents the property (tenant), governed by a lease agreement.

Lease

A contractual agreement by which one party conveys property, services, or land to another for a specified time, in return for a periodic payment.

Tenancy in Common

A form of joint ownership or tenancy where each owner holds an individual, undivided interest in the property, and such interests can be of different sizes.