JanuaryFebruaryMarchAprilHer operations manager is considering a new plan, which begins in January with 200 units on hand and ends with zeroinventory. Stockout cost of lost sales is $100 per unit. Inventory holding cost is $25 per unit per month. Ignore anyidle-time costs. The plan is called plan B.Period MonthDecember01January2FebruaryMarch345Plan B: Produce at a constant rate of 1,400 units per month, which will meet minimum demands. Then usesubcontracting, with additional units at a premium price of $75 per unit. Subcontracting capacity is limited to 800 unitsper month. Evaluate this plan by computing the costs for January through August.671,4001,5001,6001,800In order to arrive at the costs, first compute the ending inventory and subcontracting units for each month by filling in thetable below (enter your responses as whole numbers).8MayJuneJulyAugustAprilMayJuneJulyAugust2,2002,1001,8001,400Demand Production1,4001,5001,6001,8002,2002,1001,8001,4001,4001,4001,4001,4001,4001,4001,4001,400EndingInventory200SubcontractUnits5111 <The president of Hill Enterprises, Terri Hill, projects the firm's aggregate demand requirements over the next 8 monthsas follows:JanuaryFebruaryMarchApril1,4001,5001,6001,800Her operations manager is considering a new plan, which begins in January with 200 units on hand and ends with zeroinventory. Stockout cost of lost sales is $100 per unit. Inventory holding cost is $25 per unit per month. Ignore anyidle-time costs. The plan is called plan B.Period Month0 December1January2February3March4Plan B: Produce at a constant rate of 1,400 units per month, which will meet minimum demands. Then usesubcontracting, with additional units at a premium price of $75 per unit. Subcontracting capacity is limited to 800 unitsper month. Evaluate this plan by computing the costs for January through August.AprilMayJune7 July56In order to arrive at the costs, first compute the ending inventory and subcontracting units for each month by filling in thetable below (enter your responses as whole numbers).MayJuneJulyAugustDemand1,4001,5001,6001,8002,2002,1001,8002,2002,1001,8001,400Production1,4001,4001,4001,4001,4001,4001,400EndingInventory200SubcontractUnits

Given data is Stockout cost = $100 per unit Inventory holding cost = $25 per unit Subcontract cost = $75 per unit The procedure of production will be in the following manner. First, the fixed production amount (1400) will be used to meet the demand. Subtract demand and production to determine if there are any additional units left to fulfill. If additional units are left then fulfill them using subcontracts up to 800 units. If even after subcontracting 800 units maximum there is additional demand remaining then it will become stockout inventory. If while fulfilling demand the production amount is left over then it will be stored and used in the next period. The calculation for each period is shown below. Jan Units left/exceeded=(End inv+Prod)-demandUnits left/exceeded=(200+1400)-1400Units exceeded=200Subcontract=0Stockout=0Units holded=200Ending inv=200 Feb Units left/exceeded=(End inv+Prod)-demandUnits left/exceeded=(200+1400)-1500Units exceeded=100Subcontract=0Stockout=0Units holded=100Ending inv=100 March Units left/exceeded=(End inv+Prod)-demandUnits left/exceeded=(100+1400)-1600Units left=100Subcontract=100Stockout=0Units holded=0Ending inv=0 April Units left/exceeded=(End inv+Prod)-demandUnits left/exceeded=(0+1400)-1800Units left=400Subcontract=400Stockout=0Units holded=0Ending inv=0 May Units left/exceeded=(End inv+Prod)-demandUnits left/exceeded=(0+1400)-2200Units left=800Subcontract=800Stockout=0Units holded=0Ending inv=0 June Units left/exceeded=(End inv+Prod)-demandUnits left/exceeded=(0+1400)-2100Units left=700Subcontract=700Stockout=0Units holded=0Ending inv=0 July Units left/exceeded=(End inv+Prod)-demandUnits left/exceeded=(0+1400)-1800Units left=400Subcontract=400Stockout=0Units holded=0Ending inv=0 August Units left/exceeded=(End inv+Prod)-demandUnits left/exceeded=(0+1400)-1400Units left=0Subcontract=0Stockout=0Units holded=0Ending inv=0 The table below summarizes all the calculated values Month Ending inventory Units holded Stockout Subcontract Jan 200 200 0 0 Feb 100 100 0 0 March 0 0 0 100 April 0 0 0 400 May 0 0 0 800 June 0 0 0 700 July 0 0 0 400 Aug 0 0 0 0The cost calculation is given below. Holding cost H=Units holded×holding costH=(200+100)×25H=$7500 Subcontract cost S=Units subcontracted×subcontracting costS=(100+400+800+700+400)×75S=$1,80,000 Stockout cost s=Units stocked out×stockout costs=0×100s=$0 Total cost T=H+S+sT=7500+1,80,000+0T=$1,87,500