The S&OP team at Kansas Furniture, has received the following estimates of demand requirements: July 900 Month June July Aug. Sept. Oct. Nov. Dec. Aug Sept. Oct. Nov. Dec. The total cost, excluding normal time labor costs, for Plan D=$ Assuming stockout costs for lost sales of $90 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 C: Keep the current workforce steady at a level producing 1,300 units per month. Subcontract the remainder to meet demand at a $65 per unit premium cost. Assume that 400 units remaining from June are available in July. (Enter all responses as whole numbers.) Aug. 1,300 1,300 1,500 2,000 Demand 1,700 1,700 900 1,300 1,500 2,000 1,700 1,700 Sept. 1,500 1,350 1,350 1,350 1,350 1,350 Oct. 2,000 1,300 Plan D Month Demand Production Overtime (Units) July 900 1,350 1,300 1,300 1,300 1,300 1,300 Plan C Production Subcontract (Units) The total cost, excluding normal time labor costs, for Plan C = $ (enter your response as a whole number). Plan D: Keep the current workforce at a level capable of producing 1,350 units per month. Permit a maximum of 20% overtime at a premium of $42 per unit. Assume that warehouse limitations permit no more than a 180-unit carryover from month to month. This plan means that any time inventories reach 180, the plant is kept idle. Inventory carrying cost is $30 per unit per month. Idle time per unit is $65. Any additional needs are subcontracted at a cost of $65 per incremental unit. (Enter all responses as whole numbers.) Nov. 1,700 Ending Inventory Dec. 1,700 (enter your response as a whole number). Ending Inventory 400 Subcontract (Units) Idle Time (Units)
The S&OP team at Kansas Furniture, has received the following estimates of demand requirements: July 900 Month June July Aug. Sept. Oct. Nov. Dec. Aug Sept. Oct. Nov. Dec. The total cost, excluding normal time labor costs, for Plan D=$ Assuming stockout costs for lost sales of $90 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 C: Keep the current workforce steady at a level producing 1,300 units per month. Subcontract the remainder to meet demand at a $65 per unit premium cost. Assume that 400 units remaining from June are available in July. (Enter all responses as whole numbers.) Aug. 1,300 1,300 1,500 2,000 Demand 1,700 1,700 900 1,300 1,500 2,000 1,700 1,700 Sept. 1,500 1,350 1,350 1,350 1,350 1,350 Oct. 2,000 1,300 Plan D Month Demand Production Overtime (Units) July 900 1,350 1,300 1,300 1,300 1,300 1,300 Plan C Production Subcontract (Units) The total cost, excluding normal time labor costs, for Plan C = $ (enter your response as a whole number). Plan D: Keep the current workforce at a level capable of producing 1,350 units per month. Permit a maximum of 20% overtime at a premium of $42 per unit. Assume that warehouse limitations permit no more than a 180-unit carryover from month to month. This plan means that any time inventories reach 180, the plant is kept idle. Inventory carrying cost is $30 per unit per month. Idle time per unit is $65. Any additional needs are subcontracted at a cost of $65 per incremental unit. (Enter all responses as whole numbers.) Nov. 1,700 Ending Inventory Dec. 1,700 (enter your response as a whole number). Ending Inventory 400 Subcontract (Units) Idle Time (Units)
Chapter19: Pricing Concepts
Section: Chapter Questions
Problem 6DRQ
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Transcribed Image Text:9. The S&OP team at Kansas Furniture, has received the following estimates of demand requirements:
July
900
Month
July
Aug.
Sept.
Oct.
Nov.
Dec.
Month
June
July
The total cost, excluding normal time labor costs, for Plan D = $
Assuming stockout costs for lost sales of $90 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 C: Keep the current workforce steady at a level producing 1,300 units per month. Subcontract the remainder to meet demand at a $65 per unit premium cost. Assume that 400 units remaining from June are
available in July. (Enter all responses as whole numbers.)
Aug.
Sept.
Oct.
Nov.
Dec.
Aug.
1,300
Demand
1,300
1,500
2,000
1,700
1,700
900
1,300
1,500
2,000
1,700
1,700
Sept.
1,500
1,350
1,350
1,350
1,350
1,350
Production
1,300
Oct.
2,000
1,300
1,300
1,300
1,300
1,300
Plan C
The total cost, excluding normal time labor costs, for Plan C = $
(enter your response as a whole number).
Plan D: Keep the current workforce at a level capable of producing 1,350 units per month. Permit a maximum of 20% overtime at a premium of $42 per unit. Assume that warehouse limitations permit no more than a
180-unit carryover from month to month. This plan means that any time inventories reach 180, the plant is kept idle. Inventory carrying cost is $30 per unit per month. Idle time per unit is $65. Any additional needs are
subcontracted at a cost of $65 per incremental unit. (Enter all responses as whole numbers.)
Plan D
Demand Production Overtime (Units)
900
1,350
Subcontract (Units)
Nov.
1,700
Ending
Inventory
Dec.
1,700
(enter your response as a whole number).
Ending
Inventory
400
Print
Subcontract (Units)
Idle Time
(Units)
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