The Sales & Operations Planning (S&OP) team at Kansas Furniture has received estimated demand requirements, which are detailed in the table below. Using the given parameters—such as a one-time stockout cost of $125 per lost unit, an inventory carrying cost of $30 per unit per month, and zero beginning and ending inventory—the team will evaluate two potential plans using an incremental cost method:**Plan A:** This plan involves producing at a constant rate (equal to the minimum requirement) of 1,100 units per month. Additional units required are to be subcontracted at a premium cost of $70 per unit, with a subcontracting capacity capped at 800 units per month.Here’s the demand table for Plan A:| Month | Demand | Production | Ending Inventory | Subcontract (Units) ||------------|--------|------------|------------------|---------------------|| July | 1300 | 1100 | 0 | 200 || August | 1150 | 1100 | 0 | 50 || September | 1100 | 1100 | 0 | 0 || October | 1600 | 1100 | 0 | 500 || November | 1900 | 1100 | 0 | 800 || December | 1900 | 1100 | 0 | 800 |**The total cost, excluding normal time labor costs, for Plan A is $____.** (The response should be a whole number.)This approach ensures that demand is met each month through a mix of constant production and subcontracting, keeping the ending inventory at zero. **Plan B: Workforce Adjustment Strategy**In this plan, the workforce is adjusted to meet the production levels of the previous month's demand. The company initially produced 1,300 units in June. Costs associated with workforce adjustments include hiring additional workers at $30 per unit produced and layoffs costing $60 per unit reduced. Both hiring and layoff costs occur in the month when changes in production are necessary. For example, a reduction in production from 1,300 units in July to 1,150 units in August requires layoffs and incurs costs.**Monthly Table:**| Month | Demand | Production | Hire (Units) | Layoff (Units) | Ending Inventory | Stockouts (Units) ||-----------|--------|------------|--------------|----------------|------------------|-------------------|| July | 1300 | | | | | || August | 1150 | | | | | || September | 1100 | | | | | || October | 1600 | | | | | || November | 1900 | | | | | || December | 1900 | | | | | |**Cost Analysis:**- **Total Hiring Cost**: $ ___ (Enter your response as a whole number.)- **Total Layoff Cost**: $ ___ (Enter your response as a whole number.)- **Total Inventory Carrying Cost**: $ ___ (Enter your response as a whole number.)- **Total Stockout Cost**: $ ___ (Enter your response as a whole number.)- **Total Cost, excluding normal time labor costs, for Plan B**: $ ___ (Enter your response as a whole number.)This structure aids in decision-making by demonstrating the financial implications of production and workforce changes required to meet demand dynamics effectively.

Plan A is the steady production rate plan, in which the production is set to a specific quantity,…

The S&OP team at Kansas Furniture, has received estimates of demand requirements as shown in the table. Assuming one-time stockout costs for lost sales of $125 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 1,100 units per month and subcontract additional units at a $70 per unit premium cost. Subcontracting capacity is limited to 800 units per month. (Enter all responses as whole numbers).

The S&OP team at Kansas Furniture, has received estimates of demand requirements as shown in the table. Assuming one-time stockout costs for lost sales of $125 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 1,100 units per month and subcontract additional units at a $70 per unit premium cost. Subcontracting capacity is limited to 800 units per month. (Enter all responses as whole numbers).

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 totalcost, excluding normal time labor costs for plan a= ? $
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