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QUESTION 32 A companys demand forecast for the next 6 months is shown in the table below as daily demand (units/day). Their


QUESTION 31 4 points A companys average daily demand over 6 months is 41 units/day. If the company decides to produce 21 uni
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Answer #1

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Question 31 –

Information provided in the question,

· Average Daily demand = 41 units / day

· In house production capacity = 21 units / day

· Remaining Production to be subcontracted i.e. = 20 units / day

· Subcontracting cost per unit = 13$ per unit

Total subcontracting cost to paid for 6 months (124 days) would be

· Total 6 months production Quantity = 41 unit / day x 124 days = 5,084 units

· Unit Produced by own capacity = 21 units / day x 124 days = 2,604 units

· Units produced by the subcontractors = 5,084 – 2,604 = 2,480 units

· Subcontracting cost = 2480 units x 13 $/unit = 33,240 $

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