Produce at a constant rate

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Reference no: EM131801850

The president of Hill? Enterprises, Terri? Hill, projects the? firm's aggregate demand requirements over the next 8 months as? follows:

Jan	1,400	May	2,200
Feb	1,600	June	2,200
Mar	1,800	July	1,800
Apr	1,800	Aug	1,800

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 1,400 units per? month, which will meet minimum demands. Then use? subcontracting, with additional units at a premium price of ?$75 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	Ending Invertory	Subcontract Units
0	Dec			200	XX
1	Jan	1,400	1,400	XX	XX
2	Feb	1,600	1,400	XX	XX
3	Mar	1,800	1,400	XX	XX
4	April	1,800	1,400	XX	XX
5	May	2,200	1,400	XX	XX
6	June	2,200	1,400	XX	XX
7	July	1,800	1,400	XX	XX
8	August	1,800	1,400	XX	XX

The total subcontracting cost equals=? $XX. ?(Enter your response as a whole? number.)

The total inventory carrying cost? = ?$XX. ?(Enter your response as a whole? number.)

The total? cost, excluding normal time labor? costs, is? = ?$XX. ?(Enter your response as a whole? number.)

Reference no: EM131801850

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