Kansas Furniture has received the following demand requirements: Month               Demand July                    1,000 August              1,200 September       1,400 October            1,800 November        1,800 December        1,600 Stockout costs are $100 per unit Inventory costs are $25 per unit per month No inventory left over from June for plans A, B, and D. Plan A: Produce at a steady rate equal to minimum requirements and subcontract the rest at $60 per unit.  Store additional units in inventory.  What is the total cost? Plan B: Vary the workforce. June’s production was 1,300 units.  The cost of hiring is $3,000 per 100 units.  The cost of layoffs is $6,000 per 100 units.  What is the total cost? Plan C: Keep the current workforce steady at a level producing 1,300 units per month.  Subcontract the remainder to meet demand at $60 per unit.  Assume 300 units in inventory available at end of June and usable in July.  What is the total cost? Plan D: Keep the current workforce steady at a level producing 1,300 units per month.  Permit maximum overtime at 20% at $40 per unit.  The warehouse can only store 180 units.  Idle the plant at $60 per unit.  Subcontract any additional units at $60 per unit.  What is the total cost?

Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
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Chapter 13 Homework

Kansas Furniture has received the following demand requirements:

Month               Demand

July                    1,000

August              1,200

September       1,400

October            1,800

November        1,800

December        1,600

Stockout costs are $100 per unit

Inventory costs are $25 per unit per month

No inventory left over from June for plans A, B, and D.

Plan A:

Produce at a steady rate equal to minimum requirements and subcontract the rest at $60 per unit.  Store additional units in inventory.  What is the total cost?

Plan B:

Vary the workforce. June’s production was 1,300 units.  The cost of hiring is $3,000 per 100 units.  The cost of layoffs is $6,000 per 100 units.  What is the total cost?

Plan C:

Keep the current workforce steady at a level producing 1,300 units per month.  Subcontract the remainder to meet demand at $60 per unit.  Assume 300 units in inventory available at end of June and usable in July.  What is the total cost?

Plan D:

Keep the current workforce steady at a level producing 1,300 units per month.  Permit maximum overtime at 20% at $40 per unit.  The warehouse can only store 180 units.  Idle the plant at $60 per unit.  Subcontract any additional units at $60 per unit.  What is the total cost?

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