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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 the following plan 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 $60 per unit premium cost. Subcontracting capacity is limited to 500 units per month. (Enter all responses as whole numbers). Ending Subcontract Month Demand Production Inventory (Units) 1 July 1200 1,200 2 August 1300 1,200 3 September 1200 1,200 4 October 1700 1,200 November 1650 1,200 December 1400 1,200 The total cost, excluding normal time labor costs, for Plan A = $ (Enter your response as a whole number.)

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 the following plan 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 $60 per unit premium cost. Subcontracting capacity is limited to 500 units per month. (Enter all responses as whole numbers). Ending Subcontract Month Demand Production Inventory (Units) 1 July 1200 1,200 2 August 1300 1,200 3 September 1200 1,200 4 October 1700 1,200 November 1650 1,200 December 1400 1,200 The total cost, excluding normal time labor costs, for Plan A = $ (Enter your response as a whole number.)

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 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 the following plan 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 $60 per unit premium cost. Subcontracting capacity is limited to 500 units per month. (Enter all responses as whole numbers). Ending Subcontract Month Demand Production Inventory (Units) 1 July 1200 1,200 2 August 1300 1,200 3 September 1200 1,200 4 October 1700 1,200 November 1650 1,200 December 1400 1,200 The total cost, excluding normal time labor costs, for Plan A = $ (Enter your response as a whole number.)
Transcribed Image Text: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 the following plan 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 $60 per unit premium cost. Subcontracting capacity is limited to 500 units per month. (Enter all responses as whole numbers). Ending Subcontract Month Demand Production Inventory (Units) 1 July 1200 1,200 2 August 1300 1,200 3 September 1200 1,200 4 October 1700 1,200 November 1650 1,200 December 1400 1,200 The total cost, excluding normal time labor costs, for Plan A = $ (Enter your response as a whole number.)
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