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Hi,
In deciding the production plan if the company has a contract with a customer to supply certain quantity of one or some of the products
Then the first thing is to fulfill the contact quantities
and at the same time there is a maximum demand to be produced .
So when we fulfilled the contract do we have count the contract quantities as part of the maximum and produce the remaining if the we have the available resource.
Or in addition to the contract we have to produce the full maximum quantities of the demand
off course if the resources are available ?So do we have to deduct from maximum or to produce the contract and the full maximum?
Thanks,
You do not produce the contract quantities in addition to the full maximum demand.
Instead, you fulfill the contract first and then produce up to the remaining maximum demand within the available resources.
Hello,
coming back to this question ,
If I fulfill the contract then I should use the remaining resource to fulfill the other demands
but I should follow the ranking
so I fulfill the first rank then the second rank and if still I have some remaining resource of the constraint
Then I should use that for the third-ranked product even if this exceeds the maximum demand
Because the contract quantity is not included in the maximum demand .
Am I right ?
Thanks,
Fulfill the contract quantities first.
Deduct the contract quantities from the maximum demand.
Use the remaining resources to produce the highest-ranked product up to its maximum demand.
If resources are still available, proceed to the next ranked product, and so on.You should not exceed the maximum demand for any product, even if resources are still available after fulfilling the contract and other demands. The contract quantity is included in the maximum demand, not in addition to it.
Hi,
If Some times in the question they will say that the contract is not included in the demand ,
then what we should do.
Thanks,
If the question specifies that the contract quantity is not included in the demand, you should treat the contract quantity as separate from the normal demand.
This means you will need to add the contract quantity to the normal demand to determine the total demand that must be met.
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