The Academic Company Mixes and Bottles a High-Energy Beverage in Various

Multiple Choice

The Academic Company mixes and bottles a high-energy beverage in various container types and sizes for college students. The aggregate forecast for the next four quarters (1 year) in thousands of gallons is as follows:
Table 1
$$\begin{array} { | l | l | } \hline \text { QUARTER } & \begin{array} { l } \text { FORECAST DEMAND PER } \\1,000 \text { GALLONS }\end{array} \\\hline 1 & 400 \\\hline 2 & 700 \\\hline 3 & 850 \\\hline 4 & 650 \\\hline \text { TOTAL: } & 2,600 \\\hline\end{array}$$
Academic's management makes the following assumptions:
$\bullet$ Each employee works 550 standard hours of regular time each quarter.
$\bullet$ On average, it takes 27 hours to produce and package 1 unit (1,000 gallons) .
$\bullet$ Regular-time labor costs $6.00/hour; overtime labor costs $9.00/hour.
$\bullet$ Inventory-holding cost is approximately $4.50/unit (1,000 gallons) per quarter based upon the ending inventory per quarter.
$\bullet$ Because of extremely hot weather, there is no beginning inventory available to start Quarter 1.
$\bullet$ Management wants a constant work force (no hiring or firing) .
$\bullet$ Managers have also decided to always round up the number of employees needed to the next whole integer, i.e., 37.2 yields 38 employees.
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-Using the information given in Table 1, determine how many employees would be needed to meet the peak demand in Quarter 3.

A) 32
B) 21
C) 50
D) 42