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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
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 the following plan on an incremental cost basis: Plan A: Produce at a steady rate (equal to minimum requirements) of 1,100 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). Ending Subcontract Month Demand Production Inventory (Units) 1 July 1300 1,100 0 200 2 August 1150 1,100 3 September 1100 1,100 4 October 1600 1,100 5 November 1900 1,100 6 December 1200 1,100 00000 50 0 500 800 100 The total cost, excluding normal time labor costs, for Plan A = $ (Enter your response as a whole number)
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