Given the following forecast and cost information, determine the total cost of a plan that uses regular

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Given the following forecast and cost information, determine the total cost of a plan that uses regular time production output of 600 units per month, overtime is used when needed up to a maximum of 60 units per month, and subcontracting is used if additional units are needed to meet the forecast:

Month 690 Forecast 570 600 630 670 650


Regular time cost = $40 per unit
Overtime cost = $60 per unit
Subcontracting cost = $80 per unit
Holding cost = $10 per unit per month

Holding costs for each month are calculated on the average inventory level and in U.S. dollars.

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Operations Management Managing Global Supply Chains

ISBN: 978-1506302935

1st edition

Authors: Ray R. Venkataraman, Jeffrey K. Pinto

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