The Tuna Colada
A fishing consortium anticipates highly seasonal demand for their product,yellowtail tuna steaks that can be made into the new drink sensation,the tuna colada.Their estimate of the demand profile appears below.This forecast is based on the demand profile of last year's drink,the okra colada with one key difference.The tuna colada is being positioned as a healthier alternative to eggnog,so demand is expected to climb throughout the planning period with a peak in December.
$$\begin{array} { | c | c | }
\hline \text { Month } & \text { Demand Forecast } \
\hline \text { July } & 1,560 \
\hline \text { August } & 2,200 \
\hline \text { September } & 2,850 \
\hline \text { October } & 3,440 \
\hline \text { November } & 4,020 \
\hline \text { December } & 5,280 \
\hline
\end{array}$$ The costs for the managerial levers appear in this table.
$\begin{array}{|l|c|}
\hline \text { Item } & \text { Cost } \
\hline \text { Materials cost/unit } & \$ 10 \
\hline \text { Inventory holding cost/unit/month } & \$ 4 \
\hline \text { Marginal cost of stockout/unit/month } & \$ 12 \
\hline \text { Hiring and training cost/worker } & \$ 200 \
\hline \text { Layoff cost/worker } & \$ 800 \
\hline \text { Labor hours required/unit } & 3 \
\hline \text { Regular time cost/hour } & \$ 16 \
\hline \text { Over time cost/hour } & \$ 24 \
\hline \text { Period beginning inventory equals } & 0 \
\hline \text { Period ending inventory equals } & 0 \
\hline \text { Marginal subcontracting cost/unit } & \$ 80\
\hline
\end{array}$ The base price per tuna colada is $75 and there is currently no promotion,hence,no forward buying,but management is seriously considering different promotional plans.The beginning workforce level is 80 employees.
-Use the Tuna Colada scenario to answer this question.Suppose a promotion in month 1 results in 10% consumption and a 20% forward buy.What is the peak level of inventory during the six-month planning period?

Question

The Tuna Colada
A fishing consortium anticipates highly seasonal demand for their product,yellowtail tuna steaks that can be made into the new drink sensation,the tuna colada.Their estimate of the demand profile appears below.This forecast is based on the demand profile of last year's drink,the okra colada with one key difference.The tuna colada is being positioned as a healthier alternative to eggnog,so demand is expected to climb throughout the planning period with a peak in December.
 $$\begin{array} { | c | c | } 
\hline \text { Month } & \text { Demand Forecast } \
\hline \text { July } & 1,560 \
\hline \text { August } & 2,200 \
\hline \text { September } & 2,850 \
\hline \text { October } & 3,440 \
\hline \text { November } & 4,020 \
\hline \text { December } & 5,280 \
\hline
\end{array}$$ The costs for the managerial levers appear in this table.
 $\begin{array}{|l|c|}
\hline \text { Item } & \text { Cost } \
\hline \text { Materials cost/unit } & \$ 10 \
\hline \text { Inventory holding cost/unit/month } & \$ 4 \
\hline \text { Marginal cost of stockout/unit/month } & \$ 12 \
\hline \text { Hiring and training cost/worker } & \$ 200 \
\hline \text { Layoff cost/worker } & \$ 800 \
\hline \text { Labor hours required/unit } & 3 \
\hline \text { Regular time cost/hour } & \$ 16 \
\hline \text { Over time cost/hour } & \$ 24 \
\hline \text { Period beginning inventory equals } & 0 \
\hline \text { Period ending inventory equals } & 0 \
\hline \text { Marginal subcontracting cost/unit } & \$ 80\
\hline
\end{array}$ The base price per tuna colada is $75 and there is currently no promotion,hence,no forward buying,but management is seriously considering different promotional plans.The beginning workforce level is 80 employees.
-Use the Tuna Colada scenario to answer this question.Suppose a promotion in month 1 results in 10% consumption and a 20% forward buy.What is the peak level of inventory during the six-month planning period?

Quizplus · Accepted Answer

The promotion in the first month (July) increases consumption by 10% and induces a 20% forward buy. The original demand for July is 1,560 units. With a 10% increase, the new demand for July becomes 1,560 + (1,560 * 0.10) = 1,716 units. The 20% forward buy implies that 20% of the demand from the following month (August) is bought in July, which is 20% of 2,200 = 440 units. Therefore, the total demand for July considering the promotion effects is 1,716 + 440 = 2,156 units. For August, the original demand is 2,200 units, but since 20% of it was bought in July due to forward buying, the adjusted demand for August is 2,200 - 440 = 1,760 units. The peak inventory level will occur when the cumulative production exceeds the cumulative demand by the largest margin before it is drawn down by subsequent demand. Given that the ending inventory for each period must be zero, the production in each month must equal the total demand for that month. However, with the promotion causing a spike in July's demand, the production needs to ramp up significantly in July to meet the increased demand, potentially leading to excess inventory if not all of it is sold in July. Given the information provided, the peak inventory level would likely occur in July or August due to the promotional spike, but since the question asks for the peak level during the six-month period without providing specific production or sales figures for each month beyond the demand adjustments due to the promotion, we can infer that the peak inventory level would be associated with the promotional adjustments.Considering the options provided and the explanation above, none of the options directly correspond to the calculated effects of the promotion in July. However, the question seems to be asking for the peak level of inventory during the planning period, assuming normal operations and the effects of the promotion. Without specific details on how the promotion's increased demand is immediately met (whether through increased production, use of existing inventory, or a combination of both), and given the need for clarification or correction in the premise provided, the most accurate response based on the given data and the impact of the promotion cannot be determined from the options provided. This explanation points out a discrepancy in the question's premise and the provided answer options, suggesting a need for additional information or clarification to accurately determine the peak inventory level based on the effects of the promotion described.

The Tuna Colada a Fishing Consortium Anticipates Highly Seasonal Demand

The Tuna Colada
a Fishing Consortium Anticipates Highly Seasonal Demand