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The production planner

The production planner of Omega Optical, a manufacturer of industrial lenses, developed the following production plan for the next 4 periods.

Period 1 Period 2 Period 3 Period 4

Demand Forecast 40000 70000 30000 55000
Beginning Inventory 9000
Planned Production 48000 48000 48000 48000
Ending Inventory

a. Is the production planner following a chase demand or a level capacity strategy?

b. Compute the projected beginning and ending inventory for each period. Possible backorders may be shown by a negative inventory.

I believe this is a chase demand not completely sure. Please explain

Solution Preview

Hello!
Here are your answers.

a. The production planner is following a level capacity strategy. The definition for a "chase demand" strategy is when the manager adjusts the planned production to accomodate for demand fluctuations. In this case, however, as we can see from the table you ...

Solution Summary

Compute the projected beginning and ending inventory for each period. Possible backorders may be shown by a negative inventory.

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