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Mary Rhodes, operations manager at Kansas Furniture, has received estimates of demand requirements as shown in the table. Assuming stock out cost lost sales of

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Mary Rhodes, operations manager at Kansas Furniture, has received estimates of demand requirements as shown in the table. Assuming stock out cost lost sales of $125 per unit, inventory carrying cost of $25 per unit per month, and zero beginning and ending inventory, evaluate these two plans on an incremental cost basis: Plan A: Produce at a steady rate (equal to minimum requirements) of 1,000 unit per month and subcontract additional units at a $70 per unit premium cost. Subcontracting capacity is limited to 800 units per month. (Enter all response as whole numbers). Total cost, excluding normal time labor cost, for plan A = $ . (Enter your response as a whole number.) Plan B: Vary the workforce, which performs at a current production level of 1,300 units per month. The cost of hiring additional workers is $30 per unit produced. The cost of layoffs is $65 per unit cut back. (Enter all responses as whole numbers)

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