Question

The president of Hill Enterprises, Terri Hill, projects the firm's aggregate demand requirements over the next 8 months as follows: Her operations manager is considering a new plan, which begins in January with 200 units of inventory on hand. 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 C. Plan C: Keep a stable workforce by maintaining a constant production rate equal to the average gross requirements excluding initial inventory and allow varying inventory levels. Conduct your analysis for January through August. The average monthly demand requirement = units. (Enter your response as a whole number.)

Answer 1

Month	Demand	Production	Beg Inv	End inv	shortage	Stockout cost	Inv holding cost
Jan	1500	1800	200	500	0	0	10000
Feb	1700	1800	500	600	0	0	12000
Mar	1700	1800	600	700	0	0	14000
Apr	1700	1800	700	800	0	0	16000
May	2300	1800	800	300	0	0	6000
Jun	2100	1800	300	0	0	0	0
Jul	1900	1800	0	0	100	10000	0
Aug	1500	1800	0	300	0	0	6000
total	14400					10000	64000
Avg	1800
Avg monthly demand requiremnt			1800	units
Hence, monthlyproduction rate			1800
total cost ($)			74000