hr_om11_ism_ch13

Stockoutsunits extracost 11500 15000 14500 14000 5500

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Unformatted text preview: 0,000 800 60,000 400 30,000 —  Total Extra Cost: $214,000 Plan C Period Demand Production* Ending Inv. 0 1 2 3 4 5 6 7 8 * Subcon (Units) 1,400 1,600 1,800 1,800 2,200 2,200 1,800 1,400 1,775 1,775 1,775 1,775 1,775 1,775 1,775 1,775 200 575 750 725 700 275   0   0 375 (14,200/8) = 1,775 average. All other things being equal, it would appear that Plan C, with a cost of $85,500 and stockout costs ignored, should be recommended over Plan A (cost = $224,000) or Plan B (cost = $214,000). Stockouts (Units) Extra Cost $11,500 15,000 14,500 14,000  5,500 150 15,000  25  2,500  7,500 Total Extra Cost: $85,500 192 CHAPTER 13 A G G R E G A T E P L A N N I N G (b) Graph of Plan C 13.6 (a) Plan D: Maximum units in overtime = 0.20 × 1,600 = 320 Plan D Period Demand Reg. (Units) 0 1 2 3 4 5 6 7 8 1,400 1,600 1,800 1,800 2,200 2,200 1,800 1,400 1,600 1,600 1,600 1,600 1,600 1,600 1,600 1,600 OT (Units) — — — — 320 320 200 — 840 End Inv. (Units) 200 400 400 200 — — — — 200 1,400 Stockouts (Units) Extra Cost $8,000 8,000 4,000 0 280 44,000 280 44,000 10,000 4,000 Total Extra Cost: $122,000 Noting that the additional cost of a stockout is much greater than the sum of the additional costs for overtime plus inventory storage, one might “look ahead” and schedule overtime where possibl...
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