The president of Hill Enterprises, Terri Hill, projects the firm's aggregate demand requirements over the next 8 months as follows: 1200 January February May June 2,100 1,500 2,100 March 1,700 1.800 July August 1,900 1,300 April 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 1,200 units per month, which will meet minimum demands. Then use subcontracting, with additional units at a premium price of $75 per unit Subcontracting capacity is limited to 900 units per month. Evaluate this plan by computing the costs for January through Augusi In order to arrive at the costs, first compute the ending inventory and subcontracting units for each month by filing in the table below (enter your responses as whole numbers). Ending Inventory 200 Subcontract Period Month O December 1 January 2 February 3 March 4 April 5 May 6 June 7 July 8 August Demand Production Units 1.200 1,200 1.500 1,200 1,700 1,200 1,800 1,200 5 2,100 1,200 2.100 1,200 1,900 1,200 1,300 1,200 The total subcontracting cost S (Enter your response as a whole number.) The total inventory carrying cost = S (Enter your response as a whole number.) The total cost, excluding normal time labor costs, is = $ (Enter your response as a whole number)
The president of Hill Enterprises, Terri Hill, projects the firm's aggregate demand requirements over the next 8 months as follows: 1200 January February May June 2,100 1,500 2,100 March 1,700 1.800 July August 1,900 1,300 April 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 1,200 units per month, which will meet minimum demands. Then use subcontracting, with additional units at a premium price of $75 per unit Subcontracting capacity is limited to 900 units per month. Evaluate this plan by computing the costs for January through Augusi In order to arrive at the costs, first compute the ending inventory and subcontracting units for each month by filing in the table below (enter your responses as whole numbers). Ending Inventory 200 Subcontract Period Month O December 1 January 2 February 3 March 4 April 5 May 6 June 7 July 8 August Demand Production Units 1.200 1,200 1.500 1,200 1,700 1,200 1,800 1,200 5 2,100 1,200 2.100 1,200 1,900 1,200 1,300 1,200 The total subcontracting cost S (Enter your response as a whole number.) The total inventory carrying cost = S (Enter your response as a whole number.) The total cost, excluding normal time labor costs, is = $ (Enter your response as a whole number)
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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Transcribed Image Text:10. The president of Hill Enterprises, Terri Hill, projects the firm's aggregate demand requirements over the next 8 months as follows:
2,100
January
February
1,200
May
1,500
June
2,100
1,700
1,800
March
July
August
1,900
April
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 $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 1,200 units per month, which will meet minimum demands. Then use subcontracting, with additional units at a premium price of $75 per unit. Subcontracting capacity is limited to 900 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
200
Subcontract
Period Month
O December
January
Demand
Production
Units
1
1,200
1,200
February
1,500
1,200
3
March
1,700
1,200
April
1,800
1,200
5
May
2,100
1,200
6
June
2,100
1,200
7
July
1,900
1,200
8
August
1,300
1,200
The total subcontracting cost = $
(Enter your response as a whole number.)
The total inventory carrying cost = S
(Enter your response as a whole number.)
The total cost, excluding normal time labor costs, is = $
(Enter your response as a whole number.)
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