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

question 47

Multiple Choice

Scenario 8.3 - Mousetraps
A company faces the aggregate planning problem shown in the table below.Cost of regular production is $15 per unit,the cost of producing the same unit on overtime is $22.50,the cost of subcontracting is $27 per unit,and the cost of carrying a unit in inventory from one month to the next is $10.
$$\begin{array} { | l | c | c | c | c | c | } \hline & \text { July } & \text { August } & \text { September } & \text { October } & \text { November } \\\hline \text { Forecast } & 800 & 650 & 450 & 550 & 900 \\\hline \text { Beginning Inventory } & 140 & & & & \\\hline \text { Regular Time } & & & & & \\\hline \text { Overtime } & & & & & \\\hline \text { Subcontracting } & & & & & \\\hline \text { Ending Inventory } & & & & & \\\hline\end{array}$$ The labor contract at the plant prohibits both overtime and subcontracting output to exceed 250 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.
-What is the optimal total cost of the aggregate plan developed to address Scenario 8.3?

• A)$47,200
• B)$49,960
• C)$50,400
• D)$51,325

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Definitions:

Chattel Mortgage

A mortgage in which the title to a chattel owned by the debtor is transferred to the creditor as security for the payment of a debt.

Conditional Sales Contract

A contract arrangement in which the sale is conditional upon specific terms, with the transfer of ownership from the seller to the buyer occurring only after these conditions are met.

Title Transfer

The legal process of transferring ownership of a property or asset from one party to another.

Transaction

An exchange or transfer of goods, services, or funds between parties.