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

$30 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 1,200 units per month and subcontract additional units at a $70 per unit premium cost. Subcontracting capacity is limited to 500 units per month.

(Enter all responses as whole numbers).

Month Demand Production Ending Inventory Subcontract(Units)

July 1200 1200 0 0

August 1300 1200 0 100

September 1200 1200 0 0

October 1700 1200 0 0

November 1650 1200 0 450

December 1650 1200 0 450

The total cost, excluding normal time labor costs, for Plan A = $105,000

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 $35 per unit produced. The cost of layoffs is $65 per unit cut back.

NEED FOR EACH MONTH:

Production Hire (Units) Layoff (Units) Ending Inventory Stockouts (Units)Need for each month

(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.

What is the total hiring cost?

What is the total layoff cost?

What is the total inventory carrying cost?

What is the total stockout cost?

The total cost, excluding normal time labor costs, for Plan B ?