Business, 21.08.2020 04:01, monaae3824
One of Performance Lawn Equipment's manufacturing plants supplies various engine components to manufacturers of motorcycles on a just-in-time basis. Planned production capacity for one component is 100 units per shift, and the plant operates one shift per day. Because of fluctuations in the customer's assembly operations, however, demand fluctuates and is historically between 80 and 130 units per day (with each outcome equally likely). To maintain sufficient inventory to meet its just-in-time commitments, PLE's management is considering a policy to run a second shift the next day if inventory falls to 50 or below at the end of the day (after daily demand is known). For the annual budget process, managers need to know how many additional shifts will be needed. The fundamental equation that governs this process each day is:
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