Question
The president of Hill Enterprises, Terri Hill, projects the firm's aggregate demand requirements over the next 8 months as follows: January 1,200 May 2,100 February
The president of Hill Enterprises, Terri Hill, projects the firm's aggregate demand requirements over the next 8 months as follows:
January | 1,200 | May | 2,100 |
February | 1,500 | June | 2,300 |
March | 1,600 | July | 1,700 |
April | 1,900 | August | 1,300 |
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
$125
per unit. Inventory holding cost is
$25
per unit per month. Ignore any idle-time costs. The plan is called plan C.
Plan C: Keep a stable workforce by maintaining a constant production rate equal to the average gross requirements excluding initial inventory and allow varying inventory levels.
Conduct your analysis for January through August.
The average monthly demand
requirementequals= units. (Enter your response as a whole number.)
In order to arrive at the costs, first compute the ending inventory and stockout units for each month by filling in the table below (enter your responses as whole numbers).
Period | Month | Demand | Production | Ending Inventory | Stockout (Units) |
0 | December | 200 | |||
1 | January | 1,200 | 1,700 |
|
|
2 | February | 1,500 | 1,700 |
|
|
3 | March | 1,600 | 1,700 |
|
|
4 | April | 1,900 | 1,700 |
|
|
5 | May | 2,100 | 1,700 |
|
|
6 | June | 2,300 | 1,700 |
|
|
7 | July | 1,700 | 1,700 |
|
|
8 | August | 1,300 | 1,700 |
|
|
The total stockout cost =
$.
(Enter your response as a whole number.)The total inventory carrying cost =
$.
(Enter your response as a whole number.)The total cost, excluding normal time labor costs, is =
$.
(Enter your response as a whole number.)
Enter your answer in each of the answer boxes.
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