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The president of Hill Enterprises, Terri Hill, projects the firm's aggregate demand requirements over the...

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Accounting

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The president of Hill Enterprises, Terri Hill, projects the firm's aggregate demand requirements over the next 8 months as follows 1,400 May 2,200 January February 1,700 June 2,200 March 1,700 July 1,700 April 1,700 August 1,400 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 $125 per unit. Inventory holding cost is $20 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 use subcontracting, with additional units at a premium price of $75 per unit Subcontracting capacity is limited to 800 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) 0 Period Month 0 December 1 January 2 February 3 March 4 April 5 May 6 June 7 July 8 August Demand 1,400 1,700 1,700 1,700 2,200 2,200 1,700 1,400 Production 1,400 1,400 1,400 1,400 1,400 1,400 1,400 1,400 Ending Subcontract Inventory Units 200

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