Homework Help is Here – Start Your Trial Now!
Business
Operations Management
The EGAD Bottling Company has decided to introduce a new line of premium bottled water that will include several "designer" flavors. Marketing manager Georgianna Mercer is predicting an upturn in demand based on the new offerings and the increased public awareness of the health benefits of drinking more water. She has prepared aggregate forecasts for the next six months, as shown in the following table (quantities are in tankloads). Month May Jun Jul Aug Sep Oct Total Forecast 50 60 70 90 80 70 420 Production manager Mark Mercer (no relation to Georgianna) has developed the following information. (Costs are in thousands of dollars.) $1 per tankload 60 tankloads Regular production cost Regular production capacity Overtime production cost Subcontracting cost Holding cost. $1.6 per tankload $1.8 per tankload $2 per tankload per month Backlogs are not allowed 0 tankloads Backordering cost Beginning inventory Among the strategies being considered are the following: • Level production supplemented by up to 10 tankloads a month from overtime. • A combination of overtime, inventory, and subcontracting. Regular production should be the same each month. • Using overtime for up to 15 tankloads a month, along with inventory to handle variations. Regular production should be the same each month.

The EGAD Bottling Company has decided to introduce a new line of premium bottled water that will include several "designer" flavors. Marketing manager Georgianna Mercer is predicting an upturn in demand based on the new offerings and the increased public awareness of the health benefits of drinking more water. She has prepared aggregate forecasts for the next six months, as shown in the following table (quantities are in tankloads). Month May Jun Jul Aug Sep Oct Total Forecast 50 60 70 90 80 70 420 Production manager Mark Mercer (no relation to Georgianna) has developed the following information. (Costs are in thousands of dollars.) $1 per tankload 60 tankloads Regular production cost Regular production capacity Overtime production cost Subcontracting cost Holding cost. $1.6 per tankload $1.8 per tankload $2 per tankload per month Backlogs are not allowed 0 tankloads Backordering cost Beginning inventory Among the strategies being considered are the following: • Level production supplemented by up to 10 tankloads a month from overtime. • A combination of overtime, inventory, and subcontracting. Regular production should be the same each month. • Using overtime for up to 15 tankloads a month, along with inventory to handle variations. Regular production should be the same each month.

Practical Management Science
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
See similar textbooks
icon
Related questions
Question
CASE EIGHT GLASSES A DAY (EGAD) The EGAD Bottling Company has decided to introduce a new line of premium bottled water that will include several "designer" flavors. Marketing manager Georgianna Mercer is predicting an upturn in demand based on the new offerings and the increased public awareness of the health benefits of drinking more water. She has prepared aggregate forecasts for the next six months, as shown in the following table (quantities are in tankloads). Month May Jun Jul Aug Sep Oct Total Forecast 50 60 70 90 80 70 420 Production manager Mark Mercer (no relation to Georgianna) has developed the following information. (Costs are in thousands of dollars.) Regular production cost $1 per tankload 60 tankloads Regular production capacity Overtime production cost Subcontracting cost Holding cost Backordering cost Beginning inventory Question $1.6 per tankload $1.8 per tankload $2 per tankload per month Backlogs are not allowed 0 tankloads Among the strategies being considered are the following: • Level production supplemented by up to 10 tankloads a month from overtime. • A combination of overtime, inventory, and subcontracting. Regular production should be the same each month. • Using overtime for up to 15 tankloads a month, along with inventory to handle variations. Regular production should be the same each month. 1. The objective is to choose the plan that has the lowest cost. Which plan would you recommend? 2. Presumably, information about the new line has been shared with supply chain partners. Explain what information should be shared with various partners, and why sharing that information is important.
Transcribed Image Text:CASE EIGHT GLASSES A DAY (EGAD) The EGAD Bottling Company has decided to introduce a new line of premium bottled water that will include several "designer" flavors. Marketing manager Georgianna Mercer is predicting an upturn in demand based on the new offerings and the increased public awareness of the health benefits of drinking more water. She has prepared aggregate forecasts for the next six months, as shown in the following table (quantities are in tankloads). Month May Jun Jul Aug Sep Oct Total Forecast 50 60 70 90 80 70 420 Production manager Mark Mercer (no relation to Georgianna) has developed the following information. (Costs are in thousands of dollars.) Regular production cost $1 per tankload 60 tankloads Regular production capacity Overtime production cost Subcontracting cost Holding cost Backordering cost Beginning inventory Question $1.6 per tankload $1.8 per tankload $2 per tankload per month Backlogs are not allowed 0 tankloads Among the strategies being considered are the following: • Level production supplemented by up to 10 tankloads a month from overtime. • A combination of overtime, inventory, and subcontracting. Regular production should be the same each month. • Using overtime for up to 15 tankloads a month, along with inventory to handle variations. Regular production should be the same each month. 1. The objective is to choose the plan that has the lowest cost. Which plan would you recommend? 2. Presumably, information about the new line has been shared with supply chain partners. Explain what information should be shared with various partners, and why sharing that information is important.
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 5 steps with 6 images

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
Practical Management Science
Practical Management Science
Operations Management
ISBN:
9781337406659
Author:
WINSTON, Wayne L.
Publisher:
Cengage,
Purchasing and Supply Chain Management
Purchasing and Supply Chain Management
Operations Management
ISBN:
9781285869681
Author:
Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson
Publisher:
Cengage Learning
Contemporary Marketing
Contemporary Marketing
Marketing
ISBN:
9780357033777
Author:
Louis E. Boone, David L. Kurtz
Publisher:
Cengage Learning
Marketing
Marketing
Marketing
ISBN:
9780357033791
Author:
Pride, William M
Publisher:
South Western Educational Publishing
SEE MORE TEXTBOOKS