Table 10.1
Bart Incorporated manufactures rotary air fans and uses a production-planning horizon of one-half year. It allows for regular time, part time, overtime, and subcontracting production to meet the demand but no more than 12 units may be made by each of these methods. Both anticipation inventory and backorders are allowed. The beginning (or current) inventory is 20 units. Their first attempt at a sales and operations plan has resulted in the following.

-Use the information in Table 10.1. If the firm is committed to the regular production and overtime production as shown, what level of anticipation inventory would be needed at the start of the first month to result in an ending inventory of zero after month 6?
A) 9 or fewer units
B) 10 units to 17 units
C) 18 units to 25 units
D) 25 units to 32 units

Question

Table 10.1
Bart Incorporated manufactures rotary air fans and uses a production-planning horizon of one-half year. It allows for regular time, part time, overtime, and subcontracting production to meet the demand but no more than 12 units may be made by each of these methods. Both anticipation inventory and backorders are allowed. The beginning (or current) inventory is 20 units. Their first attempt at a sales and operations plan has resulted in the following.
 
-Use the information in Table 10.1. If the firm is committed to the regular production and overtime production as shown, what level of anticipation inventory would be needed at the start of the first month to result in an ending inventory of zero after month 6?
A) 9 or fewer units 
B) 10 units to 17 units 
C) 18 units to 25 units 
D) 25 units to 32 units

Quizplus · Accepted Answer

To determine the level of anticipation inventory needed at the start of the first month, we need to calculate the demand, production, and ending inventory for each month. Using the committed regular and overtime production levels, we can calculate the total production for each month as follows:

Month 1: 12 (regular) + 12 (overtime) + 0 (subcontracted) = 24
Month 2: 12 (regular) + 12 (overtime) + 0 (subcontracted) = 24
Month 3: 12 (regular) + 12 (overtime) + 0 (subcontracted) = 24
Month 4: 12 (regular) + 12 (overtime) + 0 (subcontracted) = 24
Month 5: 12 (regular) + 12 (overtime) + 0 (subcontracted) = 24
Month 6: 12 (regular) + 6 (overtime) + 6 (subcontracted) = 24

We can then use these production levels to calculate the demand, production, and ending inventory for each month in Table 10.2 (see below).

Table 10.2

Based on this table, we can see that if there is an anticipation inventory of 18 units at the start of the first month, the ending inventory will be zero after month 6. Therefore, the correct answer is C, 18 units to 25 units.

Table 10.1 Bart Incorporated Manufactures Rotary Air Fans and Uses a Production-Planning