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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 February 1,700 June 2,300 2,100 March April 1,800 1,800 July August 1,900 1,500 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 $20 per unit per month. Ignore any idle-time costs. The plan is called plan B. Plan B: Produce at a constant rate of 1,500 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 800 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). Period Month Demand Production 0 December Ending Inventory 200 Subcontract Units 1 January 1,500 1,500 2 February 1,700 1,500 3 March 1,800 1,500 4 April 1,800 1,500 5 May 2,300 1,500 6 June 2,100 1,500 7 July 1,900 1,500 8 August 1,500 1,500

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 February 1,700 June 2,300 2,100 March April 1,800 1,800 July August 1,900 1,500 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 $20 per unit per month. Ignore any idle-time costs. The plan is called plan B. Plan B: Produce at a constant rate of 1,500 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 800 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). Period Month Demand Production 0 December Ending Inventory 200 Subcontract Units 1 January 1,500 1,500 2 February 1,700 1,500 3 March 1,800 1,500 4 April 1,800 1,500 5 May 2,300 1,500 6 June 2,100 1,500 7 July 1,900 1,500 8 August 1,500 1,500

Practical Management Science
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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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 February 1,700 June 2,300 2,100 March April 1,800 1,800 July August 1,900 1,500 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 $20 per unit per month. Ignore any idle-time costs. The plan is called plan B. Plan B: Produce at a constant rate of 1,500 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 800 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). Period Month Demand Production 0 December Ending Inventory 200 Subcontract Units 1 January 1,500 1,500 2 February 1,700 1,500 3 March 1,800 1,500 4 April 1,800 1,500 5 May 2,300 1,500 6 June 2,100 1,500 7 July 1,900 1,500 8 August 1,500 1,500
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 1,500 May February 1,700 June 2,300 2,100 March April 1,800 1,800 July August 1,900 1,500 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 $20 per unit per month. Ignore any idle-time costs. The plan is called plan B. Plan B: Produce at a constant rate of 1,500 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 800 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). Period Month Demand Production 0 December Ending Inventory 200 Subcontract Units 1 January 1,500 1,500 2 February 1,700 1,500 3 March 1,800 1,500 4 April 1,800 1,500 5 May 2,300 1,500 6 June 2,100 1,500 7 July 1,900 1,500 8 August 1,500 1,500
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