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Manager Chris Chancing of Fabric Mills, Inc.,

Manager Chris Chancing 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

















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