aggregate planning: level production strategy\nproduction cost ($/unit) $75.00\ninventory holding cost…

aggregate planning: level production strategy\nproduction cost ($/unit) $75.00\ninventory holding cost ($/unit) $1.20\nlost sales cost ($/unit) $100.00\novertime cost ($/unit) $6.10\nundertime cost ($/unit) $3.20\nrate change cost ($/unit) $5.40\nnormal production rate (units) 2,000\nending inventory (previous dec.) 900\n\nmonth demand cumulative demand production cumulative production availability ending inventory lost sales\njanuary 1,400\nfebruary 1,000\nmarch 1,900\napril 2,500\nmay 2,600\njune 2,800\njuly 2,900\naugust 2,700\nseptember 1,900\noctober 900\nnovember 1,900\ndecember 2,300\naverage\n\nconsider the situation faced by golden beverages, a producer of two major products — old fashioned and foamy delite root beers. golden beverages operates as a continuous flow factory for the next 12 months in the face of such fluctuating demand if the level demand strategy is applied? the data has been collected in the microsoft excel online file below. open the spreads to perform the required analysis to answer the questions below.\n\nquestions\n1. what is the average monthly demand? round your answer to two decimal places.\n2. what is the maximum monthly ending inventory? if an amount is zero, enter \0\. round your answer to the nearest whole number.\n3. what are the costs associated with level demand production plan? round your answers to the nearest dollar.\nproduction cost inventory cost lost sales cost overtime cost undertime cost rate change cost\nmonth $ $ $ $ $ $\ntotals\n4. what is the total cost? round your answer to the nearest dollar.

aggregate planning: level production strategy\nproduction cost ($/unit) $75.00\ninventory holding cost ($/unit) $1.20\nlost sales cost ($/unit) $100.00\novertime cost ($/unit) $6.10\nundertime cost ($/unit) $3.20\nrate change cost ($/unit) $5.40\nnormal production rate (units) 2,000\nending inventory (previous dec.) 900\n\nmonth demand cumulative demand production cumulative production availability ending inventory lost sales\njanuary 1,400\nfebruary 1,000\nmarch 1,900\napril 2,500\nmay 2,600\njune 2,800\njuly 2,900\naugust 2,700\nseptember 1,900\noctober 900\nnovember 1,900\ndecember 2,300\naverage\n\nconsider the situation faced by golden beverages, a producer of two major products — old fashioned and foamy delite root beers. golden beverages operates as a continuous flow factory for the next 12 months in the face of such fluctuating demand if the level demand strategy is applied? the data has been collected in the microsoft excel online file below. open the spreads to perform the required analysis to answer the questions below.\n\nquestions\n1. what is the average monthly demand? round your answer to two decimal places.\n2. what is the maximum monthly ending inventory? if an amount is zero, enter \0\. round your answer to the nearest whole number.\n3. what are the costs associated with level demand production plan? round your answers to the nearest dollar.\nproduction cost inventory cost lost sales cost overtime cost undertime cost rate change cost\nmonth $ $ $ $ $ $\ntotals\n4. what is the total cost? round your answer to the nearest dollar.

Answer

Explanation:

Step1: Calculate average monthly demand

Sum of all demands: $1400 + 1000+1900 + 2500+2600+2800+2900+2700+1900+900+1900+2300=25800$ Number of months is 12. Average monthly demand = $\frac{25800}{12}=2150.00$

Step2: Assume level - production rate

The normal production rate is 2000 units. Initial inventory is 900 units. We calculate ending inventory for each month. Ending inventory for month $n$ = Ending inventory for month $n - 1$+Production - Demand. January: $900 + 2000-1400 = 1500$ February: $1500+2000 - 1000=2500$ March: $2500+2000 - 1900 = 2600$ April: $2600+2000 - 2500=2100$ May: $2100+2000 - 2600 = 1500$ June: $1500+2000 - 2800 = 700$ July: $700+2000 - 2900=- 200$ (negative means lost - sales, we ignore this for maximum inventory) August: $-200+2000 - 2700=-900$ September: $-900+2000 - 1900=-800$ October: $-800+2000 - 900 = 300$ November: $300+2000 - 1900 = 400$ December: $400+2000 - 2300 = 100$ The maximum monthly ending inventory is 2600.

Step3: Calculate costs

Production cost per unit = $75$. Production cost for the year = $2000\times12\times75 = 1800000$ Inventory - holding cost per unit = $1.20$. We sum up the positive ending - inventories each month and multiply by the inventory - holding cost per unit. Total positive ending inventories: $1500 + 2500+2600+2100+1500+700+300+400+100=11700$. Inventory cost = $11700\times1.20 = 14040$ Lost - sales cost per unit = $100$. We calculate lost - sales. Lost - sales in July: $2900-(700 + 2000)=200$. Lost - sales in August: $2700-(-200 + 2000)=900$. Lost - sales in September: $1900-(-900 + 2000)=800$. Total lost - sales = $200 + 900+800 = 1900$. Lost - sales cost = $1900\times100=190000$ Overtime cost per unit = $6.10$. Since production rate is fixed at normal rate, overtime cost = $0$ Undertime cost per unit = $3.20$. Since production rate is fixed at normal rate, undertime cost = $0$ Rate - change cost per unit = $5.40$. Since production rate is fixed at normal rate, rate - change cost = $0$

Step4: Calculate total cost

Total cost=Production cost+Inventory cost+Lost - sales cost+Overtime cost+Undertime cost+Rate - change cost Total cost=$1800000+14040 + 190000+0+0+0=1994040$

Answer:

  1. 2150.00
  2. 2600
  3. Production Cost: 1800000, Inventory Cost: 14040, Lost Sales Cost: 190000, Overtime Cost: 0, Undertime Cost: 0, Rate Change Cost: 0
  4. 1994040