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The S&OP team at Kansas Fumiture, led by David Angelow, has received estimates of demand requirements as shown in the table. Assuming one-sime stockout costs for lost sales of $100 per unit inventory carrying costs of $30 per unit per month, and zero beginning and ending inventory, evaluate these two plans on an incremental cost basis: Plan A: Produce at a steady rate (equal to minimum requirements) of 1,200 units per month and subcontract additional units at a $70 per unit premium cost. Subcontracting capacity is limited to 500 units per month. (Enter all responses as whole numbers) 1 July 2 August 3 September 4 October 5 November 6 December Month Month 1 July 2 August 3 September 4 October 5 November 6 December Demand 1200 1300 Demand 1200 1300 1200 1700 1650 1650 1200 1700 1650 1650 Ending Production Inventory 1,200 0 0 0 1,200 1,200 1,200 1,200 1,200 The total cost, excluding normal time labor costs, for Plan A-$105000 (Enter your response as a whole number) Plan B: Vary the workforce to produce the prior month's demand. Demand was 1,300 units in June. The cost of hiring additional workers is $30 per unit produced. The cost of layoffs is $60 per unit out back (Enter all responses as whole numbers) Note: Both hiring and layoff costs are incurred in the month of the change (le, going from production of 1,300 in July to 1200 in August requires a leyoff (and related costs) of 100 units in August) 0 0 Hire Production (Units) 0 Subcontract (Units) 0 100 0 500 450 450 Layoff Ending (Units) Inventory Stockouts (Units)

The S&OP team at Kansas Fumiture, led by David Angelow, has received estimates of demand requirements as shown in the table. Assuming one-sime stockout costs for lost sales of $100 per unit inventory carrying costs of $30 per unit per month, and zero beginning and ending inventory, evaluate these two plans on an incremental cost basis: Plan A: Produce at a steady rate (equal to minimum requirements) of 1,200 units per month and subcontract additional units at a $70 per unit premium cost. Subcontracting capacity is limited to 500 units per month. (Enter all responses as whole numbers) 1 July 2 August 3 September 4 October 5 November 6 December Month Month 1 July 2 August 3 September 4 October 5 November 6 December Demand 1200 1300 Demand 1200 1300 1200 1700 1650 1650 1200 1700 1650 1650 Ending Production Inventory 1,200 0 0 0 1,200 1,200 1,200 1,200 1,200 The total cost, excluding normal time labor costs, for Plan A-$105000 (Enter your response as a whole number) Plan B: Vary the workforce to produce the prior month's demand. Demand was 1,300 units in June. The cost of hiring additional workers is $30 per unit produced. The cost of layoffs is $60 per unit out back (Enter all responses as whole numbers) Note: Both hiring and layoff costs are incurred in the month of the change (le, going from production of 1,300 in July to 1200 in August requires a leyoff (and related costs) of 100 units in August) 0 0 Hire Production (Units) 0 Subcontract (Units) 0 100 0 500 450 450 Layoff Ending (Units) Inventory Stockouts (Units)

Excel Applications for Accounting Principles
Excel Applications for Accounting Principles
4th Edition
ISBN:9781111581565
Author:Gaylord N. Smith
Publisher:Gaylord N. Smith
ChapterMB: Model-building Problems
Section: Chapter Questions
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The S&OP team at Kansas Fumiture, led by David Angelow, has received estimates of demand requirements as shown in the table. Assuming one-time stockout costs for lost sales of $100 per unit, inventory carrying costs of $30 per unit per month, and zero beginning and ending inventory, evaluate these two plans on an incremental cost basis: Plan A: Produce at a steady rate (equal to minimum requirements) of 1,200 units per month and subcontract additional units at a $70 per unit premium cost. Subcontracting capacity is limited to 500 units per month. (Enter all responses as whole numbers) 1 July 2 August 3 September 4 October 5 November December 6 Month Month 1 July 2 August 3 September 4 October 5 November 6 December Demand 1200 1200 1700 1300 1200 1700 1650 1650 The total cost, excluding normal time labor costs, for Plan A-$ 105000 (Enter your response as a whole number) Plan B: Vary the workforce to produce the prior month's demand. Demand was 1,300 units in June. The cost of hiring additional workers is $30 per unit produced. The cost of layoffs is $60 per unit cut back. (Enter all responses as whole numbers) Note: Both hiring and layoff costs are incurred in the month of the change (le, going from production of 1,300 in July to 1200 in August requires a layoff (and related costs) of 100 units in August). Hire Layoff (Units) (Units) Stockouts (Units) Demand Production 1200 1300 1650 1650 Ending Production Inventory 1,200 0 1,200 0 1,200 0 1,200 0 1,200 0 1,200 0 Subcontract (Units) 0 100 0 500 450 450 Ending Inventory
Transcribed Image Text:The S&OP team at Kansas Fumiture, led by David Angelow, has received estimates of demand requirements as shown in the table. Assuming one-time stockout costs for lost sales of $100 per unit, inventory carrying costs of $30 per unit per month, and zero beginning and ending inventory, evaluate these two plans on an incremental cost basis: Plan A: Produce at a steady rate (equal to minimum requirements) of 1,200 units per month and subcontract additional units at a $70 per unit premium cost. Subcontracting capacity is limited to 500 units per month. (Enter all responses as whole numbers) 1 July 2 August 3 September 4 October 5 November December 6 Month Month 1 July 2 August 3 September 4 October 5 November 6 December Demand 1200 1200 1700 1300 1200 1700 1650 1650 The total cost, excluding normal time labor costs, for Plan A-$ 105000 (Enter your response as a whole number) Plan B: Vary the workforce to produce the prior month's demand. Demand was 1,300 units in June. The cost of hiring additional workers is $30 per unit produced. The cost of layoffs is $60 per unit cut back. (Enter all responses as whole numbers) Note: Both hiring and layoff costs are incurred in the month of the change (le, going from production of 1,300 in July to 1200 in August requires a layoff (and related costs) of 100 units in August). Hire Layoff (Units) (Units) Stockouts (Units) Demand Production 1200 1300 1650 1650 Ending Production Inventory 1,200 0 1,200 0 1,200 0 1,200 0 1,200 0 1,200 0 Subcontract (Units) 0 100 0 500 450 450 Ending Inventory
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