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Chapter 13 Homework
Kansas Furniture has received the following demand requirements:
Month Demand
July 1,000
August 1,200
September 1,400
October 1,800
November 1,800
December 1,600
Stockout costs are $100 per unit
Inventory costs are $25 per unit per month
No inventory left over from June for plans A, B, and D.
Plan A:
Produce at a steady rate equal to minimum requirements and subcontract the rest at $60 per unit. Store additional units in inventory. What is the total cost?
Plan B:
Vary the workforce. June’s production was 1,300 units. The cost of hiring is $3,000 per 100 units. The cost of layoffs is $6,000 per 100 units. What is the total cost?
Plan C:
Keep the current workforce steady at a level producing 1,300 units per month. Subcontract the remainder to meet demand at $60 per unit. Assume 300 units in inventory available at end of June and usable in July. What is the total cost?
Plan D:
Keep the current workforce steady at a level producing 1,300 units per month. Permit maximum overtime at 20% at $40 per unit. The warehouse can only store 180 units. Idle the plant at $60 per unit. Subcontract any additional units at $60 per unit. What is the total cost?
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