Concept explainers
a)
To evaluate: Plan A and plan B, and determining which plan is preferable.
Introduction: The aggregate plan is the output of sales and operations planning. The major concern of aggregate planning is the production time and quantity for the intermediate future. Aggregate planning would encompass a time prospect of approximately 3 to 18 months.
b)
To determine: The best plan between plan A and plan B
Introduction: The aggregate plan is the output of sales and operations planning. The major concern of aggregate planning is the production time and quantity for the intermediate future. Aggregate planning would encompass a time prospect of approximately 3 to 18 months.
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Principles of Operations Management: Sustainability and Supply Chain Management (10th Edition)
- 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 $20 per unit per month, and zero beginning and ending inventory, evaluate these two plans on an incremental cost basis: Plan A: Produce at a steady rate (equal to minimum requirements) of 1,000 units per month and subcontract additional units at a $60 per unit premium cost. Subcontracting capacity is limited to 800 units per month. (Enter all responses as whole numbers). Subcontract Ending Inventory Month Demand Production (Units) 1 July 1000 1,000 2 August 1200 1,000 3 September 1400 1,000 4 October 1800 1,000 November 1800 1,000 December 1800 1,000arrow_forwardThe 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 $30 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 1,100 units per month and subcontract additional units at a $65 per unit premium cost. Subcontracting capacity is limited to 800 units per month. (Enter all responses as whole numbers). Month Month 1 July 2 August 3 September 4 October 5 November 6 December 1 2 3 September 4 October 5 November 6 December July August The total cost, excluding normal time labor costs, for Plan A = $ (Enter your response as a whole number.) Demand 1300 1150 1100 1600 1900 1200 Production 1,100 1,100 1,100 1,100 1,100 1,100 The S&OP team at Kansas Furniture, led by David Angelow, has received estimates of demand requirements…arrow_forwardThe 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 0arrow_forward
- 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 $125 per unit, inventory carrying costs of $30 per unit per month, and zero beginning and ending inventory, evaluate these two plans on an incremental cost basis: Plan A: Produce at a steady rate (equal to minimum requirements) of 1,100 units per month and subcontract additional units at a $70 per unit premium cost. Subcontracting capacity is limited to 800 units per month. (Enter all responses as whole numbers). Ending Inventory Subcontract (Units) Month Demand Production 1 July 1300 1,100 2 August 1150 1,100 3 September 1100 1,100 4 October 1600 1,100 5 November 1900 1,100 6 December 1900 1,100 The total cost, excluding normal time labor costs, for Plan A = $ |- (Enter your response as a whole number.)arrow_forwardThe 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 $125 per unit, inventory carrying costs of $30 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 1,000 units per month and subcontract additional units at a $60 per unit premium cost. Subcontracting capacity is limited to 800 units per month. (Enter all responses as whole numbers). Ending Inventory Subcontract Month Demand Production (Units) 1 July 1000 1,000 2 August 1200 1,000 3 September 1400 1,000 4 October 1800 1,000 November 1800 1,000 6. December 1600 1,000 LOarrow_forwardThe 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 $125 per unit, inventory carrying costs of $30 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 $60 per unit premium cost. Subcontracting capacity is limited to 500 units per month. (Enter all responses as whole numbers). Ending Subcontract Month Demand Production Inventory (Units) 1 July 1200 1,200 2 August 1300 1,200 3 September 1200 1,200 4 October 1700 1,200 November 1650 1,200 December 1400 1,200 The total cost, excluding normal time labor costs, for Plan A = $ (Enter your response as a whole number.)arrow_forward
- 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 $125 per unit, inventory carrying costs of $20 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 $60 per unit premium cost. Subcontracting capacity is limited to 500 units per month. (Enter all responses as whole numbers). Month Demand Production Ending Inventory Subcontract (Units) 1 July 1200 1,200 0 Insert 2 August 1300 1,200 0 Insert 3 September 1200 1,200 0 Insert 4 October 1700 1,200 0 Insert 5 November 1650 1,200…arrow_forwardEastman Publishing company is considering publishing a paperback textbook on spreadsheet applications for business. The fixed cost of manuscript preparation, textbook design, and production setup is estimated to be P160,000. Variable production and materials costs are estimated to be P6 per book. The publisher plans to sell the text to college and university bookstores for P46 each. A. What is the break-even point? B. What profit or loss can be anticipated with a demand of 3,800 copies? C. With a demand of 3,800 copies, what is the minimum price per copy that the publisher must change to break-even? D. If the publisher believes that the price per copy coud be increase to P50.95 and not affected the anticipated demand of 3,800 copies, what action would you recommend? What profit or loss can be anticipated?arrow_forwardSniparrow_forward
- Table below provides the demand forecast and production day information for an aggregate plan. Assume that no back orders are allowed in this case. Month January February March April May June Demand Forecast 3,000 4,500 3,400 2,500 4,000 3,200 Production Days 22 18 21 21 22 20 The costing information that is used to evaluate the total cost of each plan is as follows:• Inventory carrying cost: $4 per unit per month• Subcontracting cost per unit: $15 per unit• Working hours: 8 hours per day• Average pay rate: $12 per hour ($96 per day per worker)• Labour-hours to produce a unit: 2 hours per unit• Cost of increasing daily production rate (hiring and training): $300 per unit• Cost of decreasing daily production rate (layoffs): $700 per unitUse these information to formulate an aggregate plan. The firm would like to use level strategy: constant workforce for the aggregate planning. The firm chooses the average demand of the…arrow_forward9) APP Transportation Summary Table Given the following summary table from a Transportation Method Production Plan: What is the value of X (inventory at the end of the 3rd quarter)? Group of answer choices a) 8,100 b) 7,300 c) 1,900 d) 15,400 e) 0arrow_forwardThe president of Hill Enterprises, Terri Hill, projectsthe firm’s aggregate demand requirements over the next 8 monthsas follows:Jan. 1,400 May 2,200Feb. 1,600 June 2,200Mar. 1,800 July 1,800Apr. 1,800 Aug. 1,800 Her operations manager is considering a new plan, whichbegins in January with 200 units on hand. Stockout cost of lostsales is $100 per unit. Inventory holding cost is $20 per unit permonth. Ignore any idle-time costs. The plan is called plan A.Plan A: Vary the workforce level to execute a strategy thatproduces the quantity demanded in the prior month. TheDecember demand and rate of production are both 1,600 unitsper month. The cost of hiring additional workers is $5,000 per100 units. The cost of laying off workers is $7,500 per 100 units.Evaluate this plan.arrow_forward