If management at Deforrest Marine Motors is interested in a level strategy with their current employees using overtime andsubcontracting when demand cannot be balanced with inventory, what is the total cost of this plan?6,099,200 Deforrest Marine Motors manufactures engines for the speedboat racing circuit. As part of their annual planning cycle, they forecasteddemand for the next four quarters. The number of available days of production and the anticipated demand are given below.EmployeesProduction RateProduction CostBackorder CostOvertime CostOvertime LimitDemandQ12,4006,019,000They also estimated many of the costs required to conduct operations planning. Some of these key figures are listed below.3070 units/employee/quarterQ22,200$1,000/unit$200/unit/quarter$1,500/unit<= 25% of Reg. ProductionQ31,700Q41,800Hire CostFire CostSubcontracting CostSubcontracting LimitInventory CostInitial Inventory$1,200/employee$800/employee$1,800/unit400 units maximum$100/unit/quarter280 unitsDeforrest Marine Motors wishes to maintain the current number of employees for the entire year to follow a level strategy balanced withinventory and backorders as needed. What is the total cost of this plan?

Under this plan/strategy, different levels of demand are met by maintaining a steady rate of regular…

Answered: Deforrest Marine Motors manufactures…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter9: Decision Making Under Uncertainty

Section: Chapter Questions

Problem 30P

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Deforrest Marine Motors manufactures engines for the speedboat racing circuit. As part of their annual planning cycle, they forecasted demand for the next four quarters. The number of available days of production and the anticipated demand are given below.