Table D.2
Bahouth Enterprises produces a variety of hookahs for clients around the globe. Their small plant has a highly flexible workforce that can switch between products seamlessly. They forecast using a six-month planning period and have a demand forecast as shown in the table. The per-unit costs for each output option the sales and operations planner has at his disposal are indicated in the table. Regular output costs $40 per unit, overtime production is $60 per unit, and subcontracting is $70 per unit. Holding inventory from one month to the next costs $2 per unit per month and a backlog costs $5 per unit per month. Regular plant capacity is 300 units per month.

-Use the information in Table D.2. The plant has no limits on the number of units produced by overtime or subcontractors and adopts a level plan strategy for the six-month planning period. What is the cost for month 6 of their level plan?
A) between $16,200 and $16,600
B) between $16,600 and $17,000
C) between $17,000 and $17,400
D) between $17,400 and $17,800

Question

Table D.2
Bahouth Enterprises produces a variety of hookahs for clients around the globe. Their small plant has a highly flexible workforce that can switch between products seamlessly. They forecast using a six-month planning period and have a demand forecast as shown in the table. The per-unit costs for each output option the sales and operations planner has at his disposal are indicated in the table. Regular output costs $40 per unit, overtime production is $60 per unit, and subcontracting is $70 per unit. Holding inventory from one month to the next costs $2 per unit per month and a backlog costs $5 per unit per month. Regular plant capacity is 300 units per month.
 
-Use the information in Table D.2. The plant has no limits on the number of units produced by overtime or subcontractors and adopts a level plan strategy for the six-month planning period. What is the cost for month 6 of their level plan?
A) between $16,200 and $16,600 
B) between $16,600 and $17,000 
C) between $17,000 and $17,400 
D) between $17,400 and $17,800

Quizplus · Accepted Answer

Given the scenario of adopting a level plan strategy without limits on overtime or subcontracting, the cost for month 6 would be calculated based on the average demand, production costs, and any additional costs for overtime or subcontracting. Without specific numbers from Table D.2, the correct answer cannot be determined precisely. However, assuming a level plan strategy typically involves smoothing out production to meet demand evenly across the period, the costs would include regular production costs and potentially higher costs due to overtime or subcontracting to maintain the level output. The highest cost range provided, between $17,400 and $17,800, would likely accommodate these factors.

Table D.2 Bahouth Enterprises Produces a Variety of Hookahs for Clients Around