Question

Problem 11-6

Manager Chris Channing of Fabric Mills, Inc., has developed the forecast shown in the table for bolts of cloth. The figures are in hundreds of bolts. The department has a normal capacity of 275(00) bolts per month, except for the seventh month, when capacity will be 250(00) bolts. Normal output has a cost of $40 per hundred bolts. Workers can be assigned to other jobs if production is less than normal. The beginning inventory is zero bolts.

Month	1	2	3	4	5	6	7	Total
Forecast	250	300	250	300	280	275	270	1,925

a.	Develop a chase plan that matches the forecast and compute the total cost of your plan. Overtime is $60 per hundred bolts. (Negative amounts should be indicated by a minus sign. Leave no cells blank - be certain to enter "0" wherever required. Omit the "$" sign in your response.)

Period	1	2	3	4	5	6	7	Total
Forecast	250	300	250	300	280	275	270	1,925
Output
Regular
Overtime
Subcontract
Output - Forecast
Inventory
Beginning
Ending
Average
Backlog
Costs:
Output
Regular	$							$
Overtime
Subcontract
Inventory
Backorder
Total	$							$

b.

Would the total cost be less with regular production with no overtime, but using a subcontractor to handle the excess above normal capacity at a cost of $50 per hundred bolts? Backlogs are not allowed. The inventory carrying cost is $2 per hundred bolts. (Round your Average values to 1 decimal place. Negative amounts should be indicated by a minus sign. Leave no cells blank - be certain to enter "0" wherever required. Omit the "$" sign in your response.)

Period	1	2	3	4	5	6	7	Total
Forecast	250	300	250	300	280	275	270	1,925
Output
Regular
Overtime
Subcontract
Output - Forecast
Inventory
Beginning
Ending
Average
Backlog
Costs:
Regular	$							$
Overtime
Subcontract
Inventory
Backorder
Total	$							$

Answer 1

A.)

Month	1	2	3	4	5	6	7	Total
Forecast	250	300	250	300	280	275	270	1925
Output- Reg	250	275	250	275	275	275	250	1850
Output –OT		25		25	5		20	75
Subcontract
Output-Forst
Inventory
Beg Inv.
End Inv.
Ave. Inv.
Backlog
Costs
Reg Time	10000	11000	10000	11000	11000	11000	10000	74000
OT Time		1500		1500	300		1200	4500
Subcontract
Inventory
Backlog
Total Costs								$78500

B.)

Month	1	2	3	4	5	6	7	Total
Forecast	250	300	250	300	280	275	270	1925
Output- Reg	275	275	275	275	275	275	250
Output –OT
Subcontract					5		20
Output-Forst	25	-25	25	-25	-5	0	-20
Inventory
Beg Inv.	0	25	0	25	0	0	0
End Inv.	25	0	25	0	0	0	0
Ave. Inv.	12.5	12.5	12.5	12.5	0	0	0
Backlog	.
Costs
Reg Time	11000	11000	11000	11000	11000	11000	10000	76000
OT Time
Subcontract					250		1000	1250
Inventory	25	25	25	25				100
Backlog
Total Costs								$77,350