The president of Hil Ecerprisas, Ter Hll, projacts the firm\'s aggragate demard
ID: 372525 • Letter: T
Question
The president of Hil Ecerprisas, Ter Hll, projacts the firm's aggragate demard requiraments avar the naxtmanthe as falows: ,400 1,800 1,800 1,800 May 2,200 March Apnl Jly 800 1,400 ugust $25 par unit per manth. Igro any kdia-tma costs. Tha plan scallad plan C. Har aperations managar s consicdering a new plan, which bagins in Jaruary with 200 units of inwantery an hand. Stockaut cost af last salas is $1CO por unit Invantory holcirg ost Plan C: Kaap a stable workfarca hy mairtaining a constant productian rate ua to the avarage gnss raqiraments axcuding initial Invantrry and alow varying invantory lavals Cancut your analysis for January thraugh August The awerage manthly comand roquirement units.(Enter yourcspanse as a whalo nnber) In order to arrive t the”sts rst curuute tle erding invernory and sto out units for each month by fil ng r he table below enter your responses 3 while numbers). nding Period Month Demand Production 0 Detember January 2 February 80 1, 3 March 4 Apri 5 May 6 June 7 July 8 August 1.800 1800 2200 2 200 1,800 1.400 ,776 1,776 1,775 1,775 1,775 1,775 1,775 1,775 Thetotal stockout oost-s(Enter nur rasponse as a whol Amber) The total inventory carrying co Thetotal cost excluding normal tine labor costs, is .(Enter yosresoonse “ . whole nuebec) Enteryour response as a whole nunber)Explanation / Answer
COnsider the below Table :
Explanation:
The total sum of all the demands = 14200
There are 8 months. So the average demand = 14200/8 = 1775 units.
The january has openin stock of 200 units. The production capacity is 1775 units. So the demand is 1400 units. So the net closing inventory = opening stock + production - demand = 200 + 1775-1400= 575 units.
The closing stock of january is the opening stock of february. So the opening stock of feb =575 units.
The production of feb is 1775 units. The Feb demand is 1600 units. So the closing inventory = 575+1775-1600= 750 units.
Similarly opening and closing inventory of all other months are calculated and shown in above table.
Consider the closing stock of May is 275 units. So opening stock of June = 275 units. The production of June is 1775 units. The total units avialable in june is 1775+275= 2050 units. But the demand is 2200. So there is still need of 2200-2050 = 150 units. So in the month of june there is stockout of 150 units.
Balance in all months the avialable stock is sufficient enough to fulfill the demand.
Cost of stock out is $100 per unit. So the cost for stock out of 150 units = 150*$100 = $15000
According to above table the total holding inventory = 3650 units. It is nothing but total of all the ending inventories of all the months.
Cost of holding =$25 per unit per month.
So total cost of holding = $25*3650 = $91250
Total cost of holding + Total cost of stock out = $91250 +$15000 = $106250 = Total cost excluding labour.
Period Month Demand Production Ending Inventory Stockouts 0 December 200 0 1 January 1400 1775 575 0 2 February 1600 1775 750 0 3 March 1800 1775 725 0 4 April 1800 1775 700 0 5 May 2200 1775 275 0 6 June 2200 1775 0 150 7 July 1800 1775 25 0 8 August 1400 1775 400 0 14200 14200 3650 150Related Questions
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