The Colfor Manufacturing facility produces many parts internally, but can also outsource certain parts to two outsourcing facilities. The group needs to determine which parts are to be made internally and which parts are to be outsourced. The following table describes the internal resources required and the overall demand for the coming week.

This week they have 36 hours of machine time available at a rate of $45 per hour and 84 hours of labor available at a rate of $28 per hour. Due to quality control issues part 1 and part 2 must be produced in the same facility. The cost per part for outsourcing is listed in the table below.

Requirement:

Create a model to determine the optimum sourcing strategy to minimize total cost.

Resources required Machine time (minutes per part) Labor (minutes per part) Materials (cost per part) Demand Part 1 Part 2 Part 3 Part 4 Part 5 12 16 22 10 25 30 40 45 20 40 $19 $20 $17 $11 $20 202 202 219 249 169 Outsource cost per part Part 1 Part 2 Part 3 Part 4 Part 5 $54 $57 $50 Outsource 1 $44 Outsource 2 $53 $43 $53 $46