Demand Forecasts and Determine Lowest Cost Production Plan Assignment
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Demand Forecasts and Determine Lowest Cost Production Plan Assignment
Question Description
The following information will be used for the next 9 problems (17-25). I strongly suggest using Excel to setup the aggregate plan associated with these questions.
A key hospital supplier, IVs Plus (IVP) located in Salina, KS sells IV tubing and stands to hospitals and clinics. Sales have picked up ever since they introduced their newest “Squeaky Clean” IV stand, which eliminates all oils and germs left behind by users. The demand over the next 12 months is shown in the table below. Use the demand forecasts and determine the lowest cost production plan.
Month Demand Forecast Month Demand Forecast
January 138,000 July 129,000
February 139,715 August 194,254
March 166,400 September 200,312
April 182,415 October 172,659
May 182,037 November 163,019
June 163,337 December 226,917
Regular production cost $28 per unit
Holding cost $4 per unit per month based on ending inventory
Backorder cost $8.00 per unit per month based on ending inventory
Beginning Inventory 75,000 units
Beginning workforce 6 employees
Regular production rate 18,000 units per employee per month
Hiring cost $9,000 per worker
Firing cost $10,500 per worker
Produce at a level rate using regular time production only. Backlogs are allowed in any month except December. Ending inventory is allowed in any month. Ending inventory for December should be as low as possible.
Question 17) How many units are produced for the year using regular time production? Group of answer choices A) Less than 1,800,000 B) Between 1,800,000 and 2,000,000 C) Between 2,000,001 and 2,200,000 D) More than 2,200,000
Question 18) After hiring or firing any workers in the first month, how many workers are required throughout the year following the level production strategy? Your answer should be a numerical whole number.
Question 19) What is the monthly production cost (price to make the number of units produced each month) following the level production strategy? Group of answer choices
- A) Less than $5,000,000 B) More than $5,000,000, but less than or equal to $5,500,000 C) More than $5,500,000, but less than or equal to $6,000,000 D) More than $6,000,000
Question 20) What are the total costs incurred for the year following the level production strategy? Group of answer choices A) Less than $67,000,000 B) More than $67,000,000, but less than or equal to $68,000,000
- C) More than $68,000,000, but less than or equal to $69,000,000 D) More than $69,000,000
For the next 4 questions follow the chase production strategy. Absorb variations in demand by changing the size of the workforce. When additional employees are hired or fired, they cannot be fractions of a person. You must round up to the next whole person. When you round up, all those employees work the full month which could result in some inventory that is carried to the next period. Ending inventory should be as low as possible each month.
Question 21) How many units are produced for the year using the chase production strategy? Group of answer choices. A) Less than 1,800,000 B) Between 1,800,000 and 2,000,000 C) Between 2,000,001 and 2,200,000 D) More than 2,200,000
Question 22) What is the annual total cost of firing employees in this example following the chase production strategy? Group of answer choices
- A) Between $50,000 and $100,000 B) Between $100,001 and $150,000 C) Between $150,001 and $200,000 D) Greater than $200,001
Question 23) What are the total costs incurred for the year following the chase production strategy? Group of answer choices
- A) Less than $67,000,000 B) More than $67,000,000, but less than or equal to $68,000,000 C) More than $68,000,000, but less than or equal to $69,000,000 D). More than $69,000,000
Question 24) How many workers are required in September following the chase production strategy? Your answer should be a numerical whole number.
Question 25) Based solely on total cost calculations, should the firm follow a chase or level production strategy in this example? Group of answer choices
- A) Chase B) Level C) Neither D) Both
Demand Forecasts and Determine Lowest Cost Production Plan Assignment
Demand Forecasts and Determine Lowest Cost Production Plan Assignment
RUBRIC
Excellent Quality
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Introduction 45-41 points
The background and significance of the problem and a clear statement of the research purpose is provided. The search history is mentioned.
Literature Support
91-84 points
The background and significance of the problem and a clear statement of the research purpose is provided. The search history is mentioned.
Methodology
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Content is well-organized with headings for each slide and bulleted lists to group related material as needed. Use of font, color, graphics, effects, etc. to enhance readability and presentation content is excellent. Length requirements of 10 slides/pages or less is met.
Average Score
50-85%
40-38 points
More depth/detail for the background and significance is needed, or the research detail is not clear. No search history information is provided.
83-76 points
Review of relevant theoretical literature is evident, but there is little integration of studies into concepts related to problem. Review is partially focused and organized. Supporting and opposing research are included. Summary of information presented is included. Conclusion may not contain a biblical integration.
52-49 points
Content is somewhat organized, but no structure is apparent. The use of font, color, graphics, effects, etc. is occasionally detracting to the presentation content. Length requirements may not be met.
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37-1 points
The background and/or significance are missing. No search history information is provided.
75-1 points
Review of relevant theoretical literature is evident, but there is no integration of studies into concepts related to problem. Review is partially focused and organized. Supporting and opposing research are not included in the summary of information presented. Conclusion does not contain a biblical integration.
48-1 points
There is no clear or logical organizational structure. No logical sequence is apparent. The use of font, color, graphics, effects etc. is often detracting to the presentation content. Length requirements may not be met
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Demand Forecasts and Determine Lowest Cost Production Plan Assignment