The S&OP; team at Kansas Furniture, has received estimates of demand requirement

Question

The S&OP; team at Kansas Furniture, has received estimates of demand requirements as shown in the table. Assuming stockout costs for lost sales of $125 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 B: Vary the workforce to produce the prior month's demand. The firm produced 1,300 units in June. The cost of hiring additional workers is $30 per unit produced. The cost of layoffs is $60 per unit cut back. (Enter all responses as whole numbers.) Note: Both hiring and layoff costs are incurred in the month of the change (i.e., going from production of 1,300 in July to 1200 in August requires a layoff (and related costs) of 100 units in August).

Explanation / Answer

Incomplete data. Number of manpower required to produce 1 furniture and cost of production is not given.Without this value Minimum cost of production for all month can't be calculated by varing manpower and inventory

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