Question: Sue Badger, operations manager at Kimball Furniture, has received the following estimates of demand requirements:

Assuming stockout costs for lost sales of $100 and inventory carrying costs of $25 per unit per month, evaluate these two plans:

Plan A - Produce at a steady rate (equal to minimum requirements) of 1000 units per month and subcontract additional units at a $60 per unit premium cost.

Plan B – Vary the workforce, which performs at a current production level of 1300 units per month.  The cost of hiring additional workers is $3000 per 100 units produced.  The cost of layoffs is $6000 per 100 units cut back.

Price: $2.99

Solution: The downloadable solution consists of 2 pages
Deliverable: Word Document