President Hill Enterprises Terri Hill Projects Firm S Aggregate Demand Requirements Next 8 Q29613508

The president of Hill Enterprises, Terri Hill, projects the firm’s aggregate demand requirements over the next 8 months as follows: January February1,600 March April May June July August 2,300 2,100 1,700 1,300 1,400 1,800 1,900 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 S70 per unit. Inventory holding cost is $25 per unit per month. Ignore any idle-time costs. Evaluate the following plan. This exercise contains only Plan D. Plan D: Keep the current workforce stable at producing 1,600 units per month in addition to the regular production, another 20% o the normal production units can be produced in overtime at an additional cost o $55 per unit. A warehouse now constrains the maximum allowable inventory on hand to 600 units or less. Note: Do nol produce in overtime if production or inventory are adequate to cover demand. Plan D Production O.T. Production Endi ng Month Demand nits nits) Stockouts (Units December 1 January 2 February 3 March 4 April 5 May 6 June 7 July 8 August 200 1,400 1,600 1,800 1,900 2,300 2,100 1,700 1,300 1,600 1,600 1,600 1,600 1,600 1,600 1,600 1,600 Show transcribed image text