The president of Hill Enterprises, Terri Hill, projects the firm's aggregate demand requirements over the next 8 months as follows: January 1,400 May February 1,600 June 2,200 2.200 March April 1,800 1,800 July August 1,800 1,400 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 $100 per unit. Inventory holding cost is $25 per unit per month. Ignore any idle-time costs. The plan is called plan C. Plan C: Keep a stable workforce by maintaining a constant production rate equal to the average gross requirements excluding initial inventory and allow varying inventory levels. Conduct your analysis for January through August. In order to arrive at the costs, first compute the ending inventory and stockout units for each month by filling in the table below (enter your responses as whole numbers). Ending Period Month 0 December Demand Production Inventory Stockouts (Units) 200 1 January 1,400 1,775 2 February 1,600 1,775 3 March 1,800 1,775 4 April 1,800 1,775 5 May 2,200 1,775 6 June 2,200 1,775 7 July 1,800 1,775 8 August 1,400 1,775
The president of Hill Enterprises, Terri Hill, projects the firm's aggregate demand requirements over the next 8 months as follows: January 1,400 May February 1,600 June 2,200 2.200 March April 1,800 1,800 July August 1,800 1,400 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 $100 per unit. Inventory holding cost is $25 per unit per month. Ignore any idle-time costs. The plan is called plan C. Plan C: Keep a stable workforce by maintaining a constant production rate equal to the average gross requirements excluding initial inventory and allow varying inventory levels. Conduct your analysis for January through August. In order to arrive at the costs, first compute the ending inventory and stockout units for each month by filling in the table below (enter your responses as whole numbers). Ending Period Month 0 December Demand Production Inventory Stockouts (Units) 200 1 January 1,400 1,775 2 February 1,600 1,775 3 March 1,800 1,775 4 April 1,800 1,775 5 May 2,200 1,775 6 June 2,200 1,775 7 July 1,800 1,775 8 August 1,400 1,775
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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Question
a) The average monthly demand requirement = ____units (round to nearest whole number.)
B) The total stockout cost = $____(nearest whole number)
C) The total inventory carrying cost = $____(nearest whole number)
D) The total cost, excluding normal time labor costs, is = $_____(nearest whole number)
Transcribed Image Text:The president of Hill Enterprises, Terri Hill, projects the firm's aggregate demand requirements over the next 8 months as follows:
January
1,400
May
February
1,600
June
2,200
2.200
March
April
1,800
1,800
July
August
1,800
1,400
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 $100 per unit.
Inventory holding cost is $25 per unit per month. Ignore any idle-time costs. The plan is called plan C.
Plan C: Keep a stable workforce by maintaining a constant production rate equal to the average gross requirements excluding initial inventory and allow varying
inventory levels.
Conduct your analysis for January through August.
Transcribed Image Text:In order to arrive at the costs, first compute the ending inventory and stockout units for each month by filling in the table below (enter your responses as
whole numbers).
Ending
Period Month
0
December
Demand Production Inventory Stockouts (Units)
200
1
January
1,400
1,775
2
February
1,600
1,775
3 March
1,800
1,775
4
April
1,800
1,775
5
May
2,200
1,775
6
June
2,200
1,775
7
July
1,800
1,775
8
August
1,400
1,775
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