solution

The president of Hill? Enterprises, Terri? Hill, projects the? firm’s aggregate demand requirements over the next 8 months as? follows:

January	1,500	May	2,300
February	1,500	June	2,100
March	1,600	July	1,700
April	1,900	August	1,500

Her operations manager is considering a new? plan, which begins in January with 200 units on hand and ends with zero inventory. The Stockout cost of lost sales is ?$100 per unit. Inventory holding cost is ?$25 per unit per month. Ignore any? idle-time costs. The plan is called plan B.

Plan? B: Produce at a constant rate of

1,500

units per? month, which will meet minimum demands. Then use? subcontracting, with additional units at a premium price of ?$80 per unit. Subcontracting capacity is limited to 800 units per month. Evaluate this plan by computing the costs for January through August.

In order to arrive at the? costs, first, compute the ending inventory and subcontracting units for each month by filling in the table below ?(enter your responses as whole? numbers).

Period	Month	Demand	Production	Ending Inventory	Subcontract Units
0	December			200
1	January	1,500	1,500
2	February	1,500	1,500
3	March	1,600	1,500
4	April	1,900	1,500
5	May	2,300	1,500
6	June	2,100	1,500
7	July	1,700	1,500
8	August	1,500	1,500

The total stockout = $

The total inventory carrying cost = $

The total cost, excluding normal time labor costs = $