Question

6. Latrisa International Inc. manufactures outdoor clothing apparel. They have developed a forecast for their sandal Line. They have hired you to help them develop their production schedule for the next six months. Please use the information below to develop the production schedule and answer the questions below. (20 points) • Full time employee 10 employees • Hourly pay rate (8hrs) $ 8.00 • Labor-hours per unit 4 hours per unit • Subcontracting cost $ 20.00 • Inventory carrying cost $ 7.00 Month (A) Demand Forecast (Units) (B) Production Days Per Month (C) Average Production Days Per Month (D) Monthly Production (Units) (E) Subcontracting Production (Units) (F) Monthly Inventory Change (Units) (G) Ending Inventory (Units) January 2,500 30 30 600 1900 - 0 February 2,475 25 25 500 1975 - 0 March 3,000 30 30 600 2400 - 0 April 3,500 30 30 600 2900 - 0 May 4,100 30 30 600 3500 - 0 June 4,525 30 30 600 3925 - 0 a. Production per hour _2.5____________ b. Production rate per day __20____________ c. Total inventory carrying cost __0_____________ d. Total regular production cost __112,000_______ e. Total subcontracting cost ____332,000_____ f. Total cost of plan ___444,000_________

This question was previously submitted to a Chegg expert. Can you review and tell me if the answers to this question are correct? I am concerned because Column F and Column G are zero and I believe they should not be. Any advice is appreciated.

Answer 1

Unmet demand can be met either, by producing using overtime from existing man-power (labor) hours or, by sub-contracting the production of such unmet units to some other agency.

In this case, there is no such information given about the overtime, thus unmet demand is completed using sub-contracting only.

Moreover, it is assumed that company sub-contracted for the same number of units which could not been met thus, no ending inventory is created at the end of the period.