The president of Hill? Enterprises, Terri? Hill, projects the? firm's aggregate demand requirements over the next 8 months as? follows:
|
Jan
|
1,400
|
May
|
2,200
|
|
Feb
|
1,600
|
June
|
2,200
|
|
Mar
|
1,800
|
July
|
1,800
|
|
Apr
|
1,800
|
Aug
|
1,800
|
Her operations manager is considering a new? plan, which begins in January with 200 units on hand and ends with zero inventory. Stockout cost of lost sales is $100 per unit. Inventory holding cost is ?$20 per unit per month. Ignore any? idle-time costs. The plan is called plan B.
Plan? B: Produce at a constant rate of 1,400 units per? month, which will meet minimum demands. Then use? subcontracting, with additional units at a premium price of ?$75 per unit. Subcontracting capacity is limited to 800 units per month. Evaluate this plan by computing the costs for January through August.
In order to arrive at the? costs, first compute the ending inventory and subcontracting units for each month by filling in the table below ?(enter your responses as whole? numbers).
|
Period
|
Month
|
Demand
|
Production
|
Ending Invertory
|
Subcontract Units
|
|
0
|
Dec
|
|
|
200
|
XX
|
|
1
|
Jan
|
1,400
|
1,400
|
XX
|
XX
|
|
2
|
Feb
|
1,600
|
1,400
|
XX
|
XX
|
|
3
|
Mar
|
1,800
|
1,400
|
XX
|
XX
|
|
4
|
April
|
1,800
|
1,400
|
XX
|
XX
|
|
5
|
May
|
2,200
|
1,400
|
XX
|
XX
|
|
6
|
June
|
2,200
|
1,400
|
XX
|
XX
|
|
7
|
July
|
1,800
|
1,400
|
XX
|
XX
|
|
8
|
August
|
1,800
|
1,400
|
XX
|
XX
|
The total subcontracting cost equals=? $XX. ?(Enter your response as a whole? number.)
The total inventory carrying cost? = ?$XX. ?(Enter your response as a whole? number.)
The total? cost, excluding normal time labor? costs, is? = ?$XX. ?(Enter your response as a whole? number.)