Friday

April 25, 2014

April 25, 2014

Posted by **Anonymous** on Thursday, September 13, 2012 at 5:05pm.

boots is highly seasonal. In particular, the demand in the next year

is expected to be 3,000, 4,000, 8,000, and 7,000 pairs of boots in

quarters 1, 2, 3, and 4, respectively. With its current production facility,

the company can produce at most 6,000 pairs of boots in any

quarter. Reboot would like to meet all the expected demand, so it

will need to carry inventory to meet demand in the later quarters.

Each pair of boots sold generates a profit of $20 per pair. Each pair

of boots in inventory at the end of a quarter incurs $8 in storage

and capital recovery costs. Reboot has 1,000 pairs of boots in inventory

at the start of quarter 1. Reboot’s top management has

given you the assignment of doing some spreadsheet modeling to

analyze what the production schedule should be for the next four

quarters and make a recommendation.

(a) Visualize where you want to finish. What numbers will top

management need? What are the decisions that need to be

made? What should the objective be?

(b) Suppose that Reboot were to produce 5,000 pairs of boots in each

of the first two quarters. Calculate by hand the ending inventory,

profit from sales, and inventory costs for quarters 1 and 2.

(c) Make a rough sketch of a spreadsheet model, with blocks laid out for the data cells, changing cells, output cells and target cells

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