Estimate total overtime production cost

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Reference no: EM13105682

The president of Hill Enterprises, Terri Hill, projects the firm's aggregate demand requirements over the next 8 months as follows:
Jan. 1,500 May 2,100
Feb. 1,600 June 2,100
Mar. 1,700 July 1,700
Apr. 1,700 Aug. 1,400
* POM for Windows and/or Excel OM.
Her operations manager is considering a new plan, which begins in January with 200 units on hand. Stockout cost of lost sales is $65 per unit. Inventory holding cost is $25 per unit per month. Ignore any idle-time costs. Evaluate the following plan.
Plan D: Keep the current workforce stable at producing 1,600 units per month. In addition to the regular production, another 20% of the normal production units can be produced in overtime at an additional cost of $50 per unit. A warehouse now constrains the maximum allowable inventory on hand to 600 units or less.
a) Make a chart for from December-August
b) Total overtime production cost
c) Total inventory holding cost for January through August
d) Total Stockout cost
e) Total cost, excluding normal labor cost, for Plan D

Reference no: EM13105682

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