Panettones are fluffy dome-shaped Italian cakes popular during the holiday season. For Balucis Bakery in Milan, sales

Panettones are fluffy dome-shaped Italian cakes popular during the holiday season. For Baluci’s Bakery in Milan, sales of panettones in December account for 50% of its income for the year. The bakery has worked out a way to extend the shelf life of the popular pastry so it can begin production in September for the December market. Output is limited by the capacity of its ovens on site, but work can be outsourced to other bakeries nearby after normal hours of operation. Workers at Baluci can also work an extra shift if necessary at an overtime rate of time-and-a-half. Panettones are produced in batch sizes of 100. Given the data below (in batches), determine a production plan for Baluci that meets demand at the lowest possible cost.

Regular production cost .........$30 per batch
Overtime production cost ..........$45 per batch
Subcontracting cost .............$50 per batch
Inventory holding cost ............$ 10 per batch perperiod

Transcribed Image Text:

Regular Overtime Subcontracting MonthDemand Capacity Capacity Sept Oct Nov Dec 1600 2000 3600 8000 1600 1600 1600 1600 1600 1600 1600 1600 Capacity 1000 1000 1000 1000