Which strategy is the lowest-cost plan

Assignment Help Other Subject

Reference no: EM131491215

Southeast Soda Pop, Inc., has a new fruit drink for which it has high hopes. John Mittenthal, the production planner, has assembled the following cost data and demand forecast:
quarter forecast
1 1,800
2 1,100
3 1,600
4 900

cost/other data:
previous quarter=1,300 cases
beg. inventory=0
stockout cost=$150 per case
inventory holding cost=$40 per case at the end of quarter
hiring employees=$40 per case
terminating employees=$80 per case
subcontracting cost=$60 per case
unit cost on regular time=$30 per case
overtime cost=$15 per extra case
capacity on regular time=$1,800 cases per quarter

John's job is to develop an aggregate plan. The three initial options he wants to evaluate are:

¨ Plan A: a strategy that hires and fires personnel as necessary to meet the forecast.

¨ Plan B: a level strategy.

¨ Plan C: a level strategy that produces 1,200 cases per quarter and meets the forecast demand with inventory and subcontracting.

a) Which strategy is the lowest-cost plan?

b) If you are John's boss, the VP for operations, which plan do you implement and why?

Reference no: EM131491215

Questions Cloud

Explain differences between strategic and business planning : Write a one-two sentence personal definition of strategic planning. Explain the differences between strategic planning and business planning.

What were the real issues behind the theses : 1. What were the real issues behind the Theses? 2. What was an indulgence?

What do you believe the company should do in given situation : What would the company do if it followed Garrett Hardin's global economic justice perspective? What do you believe the company should do in this situation?

Evaluate a marketing plan : Evaluating a Marketing Plan (Medium) A firm with a current return on net operating assets of 15 percent anticipates growth in sales of 6 percent per year from.

Which strategy is the lowest-cost plan : Which strategy is the lowest-cost plan - If you are John's boss, the VP for operations, which plan do you implement and why?

Discuss how the company you selected might benefit : discuss how the company you selected might benefit from selling new customers on e-Bay (as opposed to building and maintaining its own Website).

How does this information change your valuation : Forecasting and Valuation (Medium) The reformulated balance sheet and income statement for a firm's 2012 fiscal year are below (in millions of dollars).

Can terrorism ever be morally justified : Can Terrorism Ever Be Morally Justified? Terrorism is a complex and tragically violent topic that affects every corner of the globe.

Age and disability discrimination analysis : Determine whether your story involves disparate treatment or disparate impact, and apply the facts of your story to the elements.

User Account

All Pages