Her operations manager is considering a new plan, which begins in January with 200 units on hand and ends with zero inventory. 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 1,400 units per month, which will meet minimum demands. Then usesubcontracting, with additional units at a premium price of $80 per unit. Subcontracting capacity is limited to 900 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|
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