Question

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 $125 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) Ending Inventory Subcontract Period Month Demand Production Units 0 December 200 1,400 1 January 1,400 2 February 1,500 1,400 3 March 1,400 1,800 April 4 1,800 1,400 May 5 2,200 1,400 6 2,200 1,400 June 7 July 1,900 1,400 August 8 1,500 1,400 Calculate O.T. Production, Ending Inventory, and Stockouts (units) The total overtime procution cost= $_ The total inventory holding cost for January through August= $. The total stockout cost=$ The total cost, excluding normal time labor costs, for Plan D= $__