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Case Study: Eight Glasses a Day (Egad)

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Case Study: Eight Glasses a Day (EGAD)
The student picked the third strategy because strategy 3 of 556 is less than strategy 1 of 636 and strategy 2 of 558. Strategy three is the lowest cost to use 15 hours of overtime a month and using inventory for variations. This strategy is lees that the strategy to use overtime and contractors to do the job needed. The strategy to use the leveling of the amount to 10 tankloads a month would not work if most of the predictions are off for the six month period.
Eight Glasses a Day (EGAD) should share with all their partners the issues with the new line of water and how the company plans to keep up with the demand. This is very important because the vendors are in contact with the customer and at different outlets marketing the product. These vendors must be knowledgeable about the product and confidence in the company that they can keep up with demand.
Month May Jun. Jul. Aug. Sept. Oct. Total
Forecast 50 60 70 90 80 70 420 Questions
1. The objective is to choose the plan that has the lowest cost. Which plan would you recommend?
The plan the student would recommend would be the third strategy of using over time for up to 15 tankloads a month along with inventory to handle variations. Below is how the student picked strategy three:
Strategy 1(in Thousands) Month May Jun. Jul. Aug. Sept. Oct. Total
Forecast 50 60 70 90 80 70 420
Output-Regular 60 60 60 60 60 60 360
Overtime 10 10 10 10 10 10 60
Subcontract
Output-Forecast 20 10 0 -20 -10 0
Inventory
Beginning 0 20 30 30 20 0
Ending 20 30 30 10 0 0
Average 10 25 30 20 5 0
Backlog 0 0 0 0 0 0
Cost
Regular- $1 per tankload 60 60 60 60 60 60 360
Overtime- $1.6 per tankload 16 16 16 16 16 16 96
Inventory 20 50 60 40 20 0 180
Backlog 0 0 0 0 0 0 0
Total 96 126 136 116 96 76 636 Strategy 2 (In

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