Question

In: Operations Management

Nowjuice, Inc., produces Shakewell fruit juice. A planner has developed an aggregate forecast for demand (in...

Nowjuice, Inc., produces Shakewell fruit juice. A planner has developed an aggregate forecast for demand (in cases) for the next eight months.

month	Apr	May	Jun	Jul	Aug	Sep	Oct	Nov
forecast	4500	4400	6200	6400	5800	6600	7200	6900

Use the following information to develop aggregate plans.

Regular production cost: $10.00 per case

Regular production capacity: 5,000 cases

Overtime production cost: $16 per case

Subcontracting cost: $20 per case

Holding cost: $1 per case per month

Beginning inventory: 0

Develop an aggregate plan using each of the following guidelines and compute the total cost for each plan. Which plan has the lowest total cost?

(a) Use level production of 5,000 case per month. Supplement using overtime as needed. (Ans. Total cost = $529,600)

(b) Use a combination of overtime (500 cases per month for the first five months), inventory, and subcontracting (500 cases per month from September due to the staff shortage) to handle variations in demand. Note that a proper amount of overtime for the last three months should be found to determine the total cost. (Ans. Total cost = $539,200)

(c) Which one is better?

Expert Solution

Please refer below images for Part a and b

C -> Scenario 1 is better as it has a lower cost to manage forecasted demand. Also, there is no subcontracting involves which means Nowjuice Inc would have more control over production and quality.

Note - Holding cost = (Ending inventory + Beginning inventory)* Holding cost/ 2

Scenario 1 Solved and Formulas

Scenario 2 solved and formulas

keosha answered 1 year ago

Nowjuice, Inc., produces bottled pomegranate juice. A planner has developed an aggregate forecast for demand for...

Nowjuice, Inc., produces bottled pomegranate juice. A planner has developed an aggregate forecast for demand for the next six months. Month May Jun jul Aug Sep oct Forecast 4000 4800 5600 7200 6400 5000 Use the following information to develop aggregate plans. Regular production cost $ 10 per case Regular production capacity 5000 cases Overtime production cost $ 16 per case Subcontracting cost $ 20 per case Inventory cost $ 1 per case per month Beginning inventory ...

A manager has prepared a forecast of expected aggregate demand. Develop an aggregate plan that assumes:...

A manager has prepared a forecast of expected aggregate demand. Develop an aggregate plan that assumes: A level production rate, back orders are allowed and are charged at the rate of $15 per unit per month, inventory holding costs are $2 per unit per month in average inventory, regular time cost is $7 per unit and beginning inventory is zero. Show the aggregate plan and determine the cost of this plan. (15 pts) Month Forecast 270 310 280 350 310 6.280...

OJ Inc. produces and markets fruit juice. During the harvesting season, trucks bring oranges from the...

OJ Inc. produces and markets fruit juice. During the harvesting season, trucks bring oranges from the fields to the processing plant each day during 7 A.M. to 6 P.M. On peak days, approximately 10,000 kg of oranges are trucked in every hour (assume that this occurs at a constant rate, so the size of individual trucks doesn’t matter). Trucks must dump their contents in a holding bin with a storage capacity of 6,000 kg. When the bin is full, incoming...

Hawaiian Smoothies Company purchases fruit directly from growers and produces fresh fruit smoothies and juice blends...

Hawaiian Smoothies Company purchases fruit directly from growers and produces fresh fruit smoothies and juice blends with their special recipes. Sales revenue in 2017 was $4,400,000, Variable costs were 60% of sales and fixed costs were $1,400,000. Hawaiian Smoothies is evaluating two alternatives designed to enhance profitability. Alternative one – Hawaiian Smoothies is considering purchasing automated processing equipment for preparing pineapples more efficiently. This strategy would increase fixed costs by $300,000 but decrease variable costs to 54% of sales....

UPSA Ltd is a company that produces fruit juice which is bottled and sold in crates....

UPSA Ltd is a company that produces fruit juice which is bottled and sold in crates. The normal annual level of production on which the fixed production overhead absorption is based is 120,000 crates. Production 145,000 crates Sales 112,000 crates Selling price GHS2,000 per crate Costs: Direct material GHS600 per unit Direct labour GHS520 per unit Variable overhead GHS250 per unit Fixed production overhead GHS1,820,000 Variable selling and distribution cost 10% of sales revenue Fixed selling and distribution cost GHS234,000...

Sunbright Citrus Products produces orange juice, grapefruit juice, and other citrus-related items. Sunbright obtains fruit concentrate...

Sunbright Citrus Products produces orange juice, grapefruit juice, and other citrus-related items. Sunbright obtains fruit concentrate from a cooperative in Orlando consisting of approximately 50 citrus growers. The cooperative will sell a minimum of 100 cans of fruit concentrate to citrus processors such as Sunbright. The cost per can is $9.90. Last year, the cooperative developed the Incentive Bonus Program to give an incentive to their large customers to buy in quantity. It works like this: if 200 cans of...

Company X currently producing bottled fruit juice for local markets and the demand is growing amidst...

Company X currently producing bottled fruit juice for local markets and the demand is growing amidst COVID 19 pandemic. The company were unable to meet the increasing demand due to the bottleneck experienced at labelling station as it is manually executed. Recommend an automated PLC base solution to the problem. Your solution should include; a. Detail sketch of propose automated bottle labelling station. b. PLC connection to the system. c. Descriptions on how your propose solution works.

Orange Inc. is a division of Fruits Inc. Orange Inc produces juice and sells it to...

Orange Inc. is a division of Fruits Inc. Orange Inc produces juice and sells it to a number of companies, as well as to Fruits Inc. who uses it for their division. Recently, the VP of marketing for Fruits Inc approached Orange Inc with a request to make 20 000 units of special juice. The following info is available regarding the Orange Inc. Selling price of regular juice per unit -> 80$ Variable cost of regular juice per unit ->...

Aggregate Demand and Aggregate Supply Assume Broncoland has the following aggregate demand (AD) and short-run aggregate...

Aggregate Demand and Aggregate Supply Assume Broncoland has the following aggregate demand (AD) and short-run aggregate supply (SRAS) schedules. Price Level Aggregate Demand Short-Run Aggregate Supply 120 8250 9700 115 8300 9750 110 8400 9700 105 8500 9600 100 8600 9500 95 8700 9300 90 8800 8800 85 8900 8000 80 9100 7000 Return to the original values of aggregate demand and short-run aggregate supply. Assume the long-run full-employment level of output (often called either potential GDP or the natural...

Explain how to use an economic aggregate supply and demand model to forecast a decline in:...

Explain how to use an economic aggregate supply and demand model to forecast a decline in: (a) economic growth; (b) inflation; and (c) the nominal market interest rate.