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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
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 $60 per unit. Inventory holding cost is $20 per unit per month. Ignore any idle-time costs. Evaluate the following plans D and E. Plan D: Keep the current workforce stable at producing 1,600 units per month. In addition to the regular production, another 20% of the normal production units can be produced in overtime at an additional cost of $50 per unit. A warehouse now constrains the maximum allowable inventory on hand to 600 units or less. Note: Do not produce in overtime if production or inventory are adequate to cover demand. The total overtime production cost is computed as follows: Total overtime production cost = Total overtime units overtime cost per unit. The total overtime production cost =$42,000. (Enter your response as a whole number.) The total inventory carrying cost is computed as follows: Total inventory carrying cost = Total ending inventory units ( not including December) Inventory holding cost per unit. The total inventory holding cost for January through August =$ (Enter your response as a whole number.) The total stockout cost is computed as follows: Total stockout cost = Total units short Lost sales cost per unit. The total stockout cost =$39,600. (Enter your response as a whole number.) The total cost, excluding normal time labor costs, for Plan D=$109,600. (Enter your response as a whole number.)
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