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The S&OP team at Kansas Fumiture, led by David Angelow, has received estimates of demand requirements as shown in the table. Assuming one-time stockout
The S&OP team at Kansas Fumiture, led by David Angelow, has received estimates of demand requirements as shown in the table. Assuming one-time stockout costs for lost sales of $100 per unit, inventory carrying costs of $20 per unit per month, and zero beginning and ending inventory, evaluate the following plan on an incremental cost basis: Plan B: Vary the workforce to produce the prior month's demand. Demand was 1,300 units in June. The cost of hiring additional workers is $30 per unit produced. The cost of layoffs is $60 per unit cut back. (Enter all responses as whole numbers.) Note: Both hiring and layoff costs are incurred in the month of the change (ie, going from production of 1,300 in July to 1000 in August requires a layoff (and related costs) of 300 units in August) Hire Month 1 July Demand Production (Units) 1000 Layoff Ending Stockouts (Units) Inventory (Units) 2 August 1200 3 September 1400 4 October 1800 5 November 1800 6 December 1800
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