Bart Incorporated manufactures rotary air fans and uses a production-planning horizon of one-half year. It allows for regular time, part time, overtime, and subcontracting production to meet the demand but no more than 12 units may be made by each of these methods. Both anticipation inventory and backorders are allowed. The beginning (or current) inventory is 20 units. Their first attempt at a sales and operations plan has resulted in the following. 1 2 3 4 5 6 Total
Inputs
Forecasted demand 100 125 120 80 75 70 570
Workforce Level 80 80 80 80 80 80 480
Part Time 12 12 12 12 12 12 72
Overtime 0 0 0 0 0 0 0
Subcontract 0 0 0 0 0 0 0
Derived
Beginning inventory 20 12 0 0 0 0
Ending inventory 12 0 0 0 0 2
Backlog 0 21 49 37 20 0 127
Calculated
Workforce level $5 400 400 400 400 400 400 $2,400
Part Time $6 72 72 72 72 72 72 $432
Overtime $7.5 0 0 0 0 0 0 $0
Subcontract $8 0 0 0 0 0 0 0
Inventory holding $5 80 30 0 0 0 5 $115
Back orders $20 0 420 980 740 400 0 $2,540
Total $552 $922 $1,452 $1,212 $872 $477 $5,487
Use the information in Table Which of these changes would result in the greatest improvement (in terms of total cost) for the production plan?
a. Increase anticipation inventory to 30 units at the start of the first month.
b. Reduce anticipation inventory to 18 units at the start of the first month.
c. Increase anticipation inventory to 40 units at the start of the first month.
d. Reduce anticipation inventory to 10 units at the start of the first month.