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

Her operations manager is considering a new plan, which begins in January with 200 units of inventory on hand. Stockout cost of lost sales is $65 per unit. Inventory holy cost is $20 per unit per month. Ignore any idle-time costs. Evaluate the following plan:

Keep the current workforce stable at producing 1600 units per month. In addition to the regular production, another 20% of the normal production units can be produced in overtime at an additional cost of $55 per unit. A warehouse now constrains the maximum allowable inventory on hand to 600 units or less.

Month	Demand	Production(units)	O.T. Production (Units)	Ending inventory	Stockouts (units)
Dec				200
Jan	1500	1600
Feb	1500	1600
March	1600	1600
April	1700	1600
May	2100	1600
June	2300	1600
July	1800	1600
August	1500	1600

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