Manager Chris Channing of Fabric Mills, Inc., has developed the forecast

Manager Chris Channing of Fabric Mills, Inc., has developed the forecast shown in the table for bolts of cloth. The figures are in hundreds of bolts. The department has a normal capacity of 275(00) bolts per month, except for the seventh month, when capacity will be 250(00) bolts. Normal output has a cost of $40 per hundred bolts. Workers can be assigned to other jobs if production is less than normal. The beginning inventory is zero bolts.

Month    1    2    3    4    5    6    7    Total
Forecast    250    300    250    300    280    275    270    1,925

a. Develop a chase plan that matches the forecast and compute the total cost of your plan. Overtime is $60 per hundred bolts. (Negative amounts should be indicated by a minus sign. Leave no cells blank – be certain to enter “0″ wherever required. Omit the “$” sign in your response.)

b. Would the total cost be less with regular production with no overtime, but using a subcontractor to  handle the excess above normal capacity at a cost of $50 per hundred bolts? Backlogs are not allowed. The inventory carrying cost is $2 per hundred bolts. (Round your Average values to 1 decimal place. Negative amounts should be indicated by a minus sign. Leave no cells blank – be certain to enter “0″ wherever required. Omit the “$” sign in your response.)

Here’s the SOLUTION

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