The president of Hill Enterprises, Terri Hill, projects the firm's aggregate demand requirements over the next 8 months as follows: January 1,200 May February March April 1,500 June 2,100 2,300 1,600 1,900 July August 1,700 1,300 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 = 1700 units. (Enter your response as a whole number.) In order to arrive at the costs, first compute the ending inventory and stockout units for each month by filling in the table below (enter your responses as whole numbers). Ending Period Month 0 December Demand Production Inventory Stockouts (Units) 200 1 January 1,200 1,700 2 February 1,500 1,700 3 March 1,600 1,700 4 April 1,900 1,700 5 May 2,100 1,700 6 June 2,300 1,700 7 July 1,700 1,700 8 August 1,300 1,700
The president of Hill Enterprises, Terri Hill, projects the firm's aggregate demand requirements over the next 8 months as follows: January 1,200 May February March April 1,500 June 2,100 2,300 1,600 1,900 July August 1,700 1,300 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 = 1700 units. (Enter your response as a whole number.) In order to arrive at the costs, first compute the ending inventory and stockout units for each month by filling in the table below (enter your responses as whole numbers). Ending Period Month 0 December Demand Production Inventory Stockouts (Units) 200 1 January 1,200 1,700 2 February 1,500 1,700 3 March 1,600 1,700 4 April 1,900 1,700 5 May 2,100 1,700 6 June 2,300 1,700 7 July 1,700 1,700 8 August 1,300 1,700
Chapter4: Preparing And Using Financial Statements
Section: Chapter Questions
Problem 2EP
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