The president of Hill Enterprises, Terri Hill, projects the firm's aggregate demand requirements over the next 8 months as follows: January 1,500 May 2,300 February 1,600 1,700 June 2,200 1,700 March July April 1,800 August 1,300 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 $100 per unit. Inventory holding cost is $25 per unit per month. Ignore any idle-time costs. The plan is called plan B. Plan B: Produce at a constant rate of 1,300 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 1,000 units per month. Evaluate this plan by computing the costs for January through August. In order to arrive at the costs, first compute the ending inventory and subcontracting units for each month by filling in the table below (enter your responses as whole numbers). Ending Inventory Subcontract Units Period Demand Production Month December January 200 1,500 1,300 February 1,600 1,300 3 March 1,700 1,300 April 1,800 1,300 May 2,300 1,300 6 June 2,200 1,300 7 July 1,700 1,300 August 1,300 1,300

The president of Hill Enterprises, Terri Hill, projects the firm's aggregate demand requirements over the next 8 months as follows: January 1,500 May 2,300 February 1,600 1,700 June 2,200 1,700 March July April 1,800 August 1,300 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 $100 per unit. Inventory holding cost is $25 per unit per month. Ignore any idle-time costs. The plan is called plan B. Plan B: Produce at a constant rate of 1,300 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 1,000 units per month. Evaluate this plan by computing the costs for January through August. In order to arrive at the costs, first compute the ending inventory and subcontracting units for each month by filling in the table below (enter your responses as whole numbers). Ending Inventory Subcontract Units Period Demand Production Month December January 200 1,500 1,300 February 1,600 1,300 3 March 1,700 1,300 April 1,800 1,300 May 2,300 1,300 6 June 2,200 1,300 7 July 1,700 1,300 August 1,300 1,300

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

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