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Lavare, located in the Chicago suburbs, is a major manufacturer of stainless steel sinks. Lavare is in the middle of the S&OP exercise for the

Lavare, located in the Chicago suburbs, is a major manufacturer of stainless steel sinks. Lavare is in the middle of the S&OP exercise for the coming year. Anticipated monthly demand from distributors over the 12 months is shown below:

Month

Demand

January

13000

February

11000

March

15000

April

18000

May

25000

June

26000

July

30000

August

29000

September

21000

October

18000

November

14000

Decmber

11000

Capacity at Lavare is governed by the number of machine operators it hires. The firm works 20 days a month, with a regular operating shift of eight hours per day. Any time beyond that is considered overtime. Regular-time pay is $15 per hour and overtime is $22 per hour. Overtime is limited to 20 hours per month per employee. The plant currently has 250 employees. Each sink requires two hours of labor input. It costs $3 to carry a sink in inventory for a month. Materials cost per sink is $40. Sinks are sold to distributors at a price of $125 each. We assume that no stock outs are allowed and the starting inventory entering January is 5,000 units and the desired ending inventory in December is also 5,000 units.

What is the annual profit from this plan?

What is the cost of this plan?

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