Given the following calculate (a)cost using a level production plan, (b)cost using a chase aggregate plan, and identify the lowest cost option. In the level production plan backorders are allowed but for each unfilled order it costs the company $10/unit. The employees work an 8 hour day and overtime is not allowed
A)A=5834, B = 5472, C = level
B)A=5472, B = 5834, C = level
C)A=5834, B = 5472, C = chase
D)A=5472, B = 5834, C = chase
E)A =5834, B = 5472, C = either

Question

Given the following calculate (a)cost using a level production plan, (b)cost using a chase aggregate plan, and identify the lowest cost option. In the level production plan backorders are allowed but for each unfilled order it costs the company $10/unit. The employees work an 8 hour day and overtime is not allowed 
A)A=5834, B = 5472, C = level 
B)A=5472, B = 5834, C = level 
C)A=5834, B = 5472, C = chase 
D)A=5472, B = 5834, C = chase 
E)A =5834, B = 5472, C = either

Quizplus · Accepted Answer

The cost using the level production plan is $5834, and the cost using the chase aggregate plan is $5472. The lowest cost option is the chase aggregate plan. This is because it tries to match production with demand instead of producing a constant amount every period. In the level production plan, backorders are allowed, which means that the cost increases for unfilled orders. Additionally, the absence of overtime means that the company cannot produce more than 8 hours a day, making it less efficient. Hence, the chase aggregate plan is the better option.

Given the Following Calculate (A)cost Using a Level Production Plan