All the calculations are done based on the assumption that plant
runs only for 1 shift:
|
Month
|
(A)
Demand Forecast
(Units)
|
(B)
Production Days Per Month
|
(C)
Average Production Days Per Month
|
(D)
Monthly Production
(Units)
|
(E)
Subcontracting Production (Units)
|
(F)
Monthly Inventory Change
(Units)
|
(G)
Ending Inventory
(Units)
|
|
January
|
2,500
|
30
|
30
|
600
|
1900
|
600
|
600
|
|
February
|
2,475
|
25
|
25
|
500
|
1975
|
500
|
1100
|
|
March
|
3,000
|
30
|
30
|
600
|
2400
|
600
|
1700
|
|
April
|
3,500
|
30
|
30
|
600
|
2900
|
600
|
2300
|
|
May
|
4,100
|
30
|
30
|
600
|
3500
|
600
|
2900
|
|
June
|
4,525
|
30
|
30
|
600
|
3925
|
600
|
3500
|
Production per hour = 10*0.25= 2.5 units/hr
Production rate per day = 10*2 = 20 units per
day
Total inventory carrying cost = 3500*7 =
$24500
Total regular production cost = $640*175 days =
$112000
Total subcontracting cost = $20*16600 =
$332000
Total cost of plan =
$24500+$112000 + $332000 =
$468500?
