Answered step by step
Verified Expert Solution
Question
1 Approved Answer
The S&OP team at Kansas Furniture, has received estimates of demand requirements as shown in the table. Assuming one-time stockout costs for lost sales of
The S&OP team at Kansas Furniture, 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 $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 units per month and subcontract additional units at a $70 per unit premium cost. Subcontracting capacity is limited to 800 units per month. (Enter all responses as whole numbers). Month 1 July 2 August 3 September 4 October 5 November 6 December Ending Demand Production Inventory 1000 1,000 0 1200 1,000 0 1400 1,000 0 1800 1,000 1800 1,000 0 1800 1,000 0 Subcontract (Units) 0 200 400 800 800 800 0 The total cost, excluding normal time labor costs, for Plan A = $ 210000 - (Enter your response as a whole number.) Plan B: Vary the workforce to produce the prior month's demand. The firm produced 1,300 units in June. 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.) Note: Both hiring and layoff costs are incurred in the month of the change (i.e., going from production of 1,300 in July to 1000 in August requires a layoff (and related costs) of 300 units in August). Hire Layoff Ending Stockouts Month Demand Production (Units) (Units) Inventory (Units) 1 July 1000 1300 2 August 1200 1000 3 September 1400 1200 4 October 1800 1400 5 November 180 1800 6 December 1800 1800 The total hiring cost = $! (Enter your response as a whole number.) The total layoff cost = $1 (Enter your response as a whole number.) The total inventory carrying cost = $| . (Enter your response as a whole number.) The total stockout cost = $ (Enter your response as a whole number.) The total cost, excluding normal time labor costs, for Plan B = 5 (Enter your response as a whole number.)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started