Name: ---------------------------------------

Assignment: 1

Marry Rhods, Operation Manager at Kansas Furniture, Has received the following estimates
of demand requirements:

July August Sept. Oct. Nov. Dec.

1000 1200 1400 1800 1800 1600

Assuming stockout costs for the lost sales of $100 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:

A: produce at steady rate equal the minimum requirement 1000 units per month and
subcontract additional units at $60 per perineum cost.

B: Vary the workforce, which perform at a current production level of 1300 units per month.
The cost of hiring additional workers is 3000 per 100 units produced and the cost of layout is
6000 per 100 units cost back.

C: keep the current workforce steady at a level producing 1300 unit per month, subcontract
the remainder to meet demand. Assume that 300 units remaining from June are available in
July.

D: keep the current workforce steady at a level producing 1300 unit per month, a permit a
maximum of 20% overtime at a premium of $40 per unit, assume that the warehouse
limitation permit no more than a 180-unit carryover from month to month .this plan means
that any inventories reach 180, the plant is kept idle and idle time unit is $60. Any additional
needs are subcontracted at cost of $60 per incremental unit.