Question
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 $65 per unit. Inventory holy cost is $20 per unit per month. Ignore any idle-time costs. Evaluate the following plan:
Keep the current workforce stable at producing 1600 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 $55 per unit. A warehouse now constrains the maximum allowable inventory on hand to 600 units or less.
| Month | Demand | Production(units) | O.T. Production (Units) | Ending inventory | Stockouts (units) |
| Dec | 200 | ||||
| Jan | 1500 | 1600 | |||
| Feb | 1500 | 1600 | |||
| March | 1600 | 1600 | |||
| April | 1700 | 1600 | |||
| May | 2100 | 1600 | |||
| June | 2300 | 1600 | |||
| July | 1800 | 1600 | |||
| August | 1500 | 1600 |
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