The president of Hill Enterprises, Terri Hill, projects the firm\'s aggregate de

Question

The president of Hill Enterprises, Terri Hill, projects the firm's aggregate demand requirements over the next 8 months as follows: 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 = units. (Enter your response as a whole number.)

Explanation / Answer

Month

Demand Production Beg Inv End inv shortage Stockout cost Inv holding cost Jan 1500 1800 200 500 0 0 10000 Feb 1700 1800 500 600 0 0 12000 Mar 1700 1800 600 700 0 0 14000 Apr 1700 1800 700 800 0 0 16000 May 2300 1800 800 300 0 0 6000 Jun 2100 1800 300 0 0 0 0 Jul 1900 1800 0 0 100 10000 0 Aug 1500 1800 0 300 0 0 6000 total 14400 10000 64000 Avg 1800 Avg monthly demand requiremnt 1800 units Hence, monthlyproduction rate 1800 total cost ($) 74000

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