Question: Her operations manager is considering a new plan, which begins in January with 200 units on hand and ends with zero inventory. Stockout cost of

Her operations manager is considering a new plan,

Her operations manager is considering a new plan, which begins in January with 200 units on hand and ends with zero inventory. Stockout cost of lost sales is $125 per unit. Inventory holding cost is $20 per unit per month. Ignore any idle-time costs. The plan is called plan B. Plan B: Produce at a constant rate of 1400 units per month, which will meet minimum demands. Then use subcontracting, with additional units at a premium price of $ 80 per unit. Subcontracting capacity is limited to 800 units per month. Evaluate this plan by computing the costs for January through August. Part 2 In order to arrive at the costs, first compute the ending inventory and subcontracting units for each month by filling in the table below

Her operations manager is considering a new plan,

Her operations manager is considering a new plan,

The president of Hill Enterprises, Terri Hill, projects the firm's aggregate demand requirements over the next 8 months as follows: January February March April 1,400 1,700 1,600 1,900 May June July August 2,100 2,200 1,700 1,400 Subcontract Units Demand Ending Inventory 200 Production Period Month 0 December 1 January 2 February 3 March 4 April 5 May 6 June 7 July 8 August 1,400 1,700 1,600 1,900 2,100 2,200 1,700 1,400 1,400 1,400 1,400 1,400 1,400 1,400 1,400 1,400 00 The total subcontracting cost = $ (Enter your response as a whole number.) The total inventory carrying cost = $ (Enter your response as a whole number.) The total cost, excluding normal time labor costs, is = $ (Enter your response as a whole number.)

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related General Management Questions!