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. Which one of these trade-offs works to your greatest advantage in terms of reducing costs over the entire planning period?
A) Produce units using part-time workers instead of regular-time workers.
B) Begin with a larger anticipation inventory to avoid backorders completely.
C) Use no overtime, subcontracting, or part time in favor of a level regular-capacity plan.
D) Begin the planning period with 570 units of anticipation inventory and produce nothing in the planning period.

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. Which one of these trade-offs works to your greatest advantage in terms of reducing costs over the entire planning period?
A) Produce units using part-time workers instead of regular-time workers. 
B) Begin with a larger anticipation inventory to avoid backorders completely. 
C) Use no overtime, subcontracting, or part time in favor of a level regular-capacity plan. 
D) Begin the planning period with 570 units of anticipation inventory and produce nothing in the planning period.

Quizplus · Accepted Answer

Starting with a larger anticipation inventory to avoid backorders can reduce costs associated with backorders, which can be more expensive than holding inventory.

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