Answered: The president of Hill Enterprises,…

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

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	1,700	June	2,100
March	1,700	July	1,900
April	1,700	August	1,500

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

$125

per unit. Inventory holding cost is

$20

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.

The average monthly demand

requirement=18001800

units. (Enter your response as a whole number.)

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).

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