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 1,200 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 Ending Subcontract Demand Production Inventory (Units) 1 July 1200 1,200 0 2 August 1300 1,200 0 3 September 1200 1,200 0 4 October 1700 1,200 0 5 November 1650 1,200 0 6 December 1400 1,200 0

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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 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 1,200 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
1
July
1200
Ending Subcontract
Production Inventory (Units)
1,200
2 August
1300
1,200
0
3 September
1200
1,200
0
4 October
1700
1,200
0
5 November
1650
1,200
0
6 December
1400
1,200
0
Transcribed Image Text: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 1,200 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 1 July 1200 Ending Subcontract Production Inventory (Units) 1,200 2 August 1300 1,200 0 3 September 1200 1,200 0 4 October 1700 1,200 0 5 November 1650 1,200 0 6 December 1400 1,200 0
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