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

question 72

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.
-Which month is less than 100% of regular capacity used for the optimal aggregate plan for Scenario 8.3?

• A)100% of regular capacity is always used.
• B)August
• C)September
• D)October

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