STP Enterprises needs help with scheduling their production ofwidgets. The following information is available:
- Cost Per Unit: $10.00 per unit
- Holding Cost Per Unit: $2.00 per unit per month
- Cost for Lost Sales: $10.00 per unit per month
- Rate Change Cost: $3.00 per unit per month (absolutevalue)
Demand for the widgets is expected to be as follows:
January: 120
February: 150
March: 100
April: 70
The beginning inventory on January 1 is expected to be zero.
STP is looking at three different production schedules asfollows:
- A level production strategy where there will be no stockouts orlost sales.
- A level production strategy where there will be no inventory atthe end of April.
- A chase strategy
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