Question
6. LMNO Gaskets has formulated a production plan for a product to meet demand over the upcoming four quarters. Demand in each of the four
6.
LMNO Gaskets has formulated a production plan for a product to meet demand over the upcoming four quarters. Demand in each of the four quarters and production, overtime, and subcontracting capacities are reported in the table below, in addition to the feasible production plan. The relevant costs are:
Regular time production cost is $25/unit.
Overtime production cost is $29/unit.
Subcontracting cost is $35/unit.
Inventory is held at a cost of $3/unit/quarter.
| Production Resource | Demand in Quarter | Capacity | |||
|---|---|---|---|---|---|
| Q1 | Q2 | Q3 | Q4 | ||
| Regular Time Q1 | 550 | 550 | |||
| Overtime Q1 | 230 | 70 | 300 | ||
| Subcontract Q1 | 500 | ||||
| Regular Time Q2 | 550 | 550 | |||
| Overtime Q2 | 300 | 300 | |||
| Subcontract Q2 | 500 | 500 | |||
| Regular Time Q3 | 550 | 550 | |||
| Overtime Q3 | 240 | 60 | 300 | ||
| Subcontract Q3 | 500 | ||||
| Regular Time Q4 | 550 | 550 | |||
| Overtime Q4 | 300 | 300 | |||
| Subcontract Q4 | 500 | 500 | |||
| Demand in Quarter | 780 | 1420 | 790 | 1410 | |
What is the total number of units held in inventory for the year? What is the total regular time production cost? What is the total overtime production cost for the year? What is the total cost for the year?
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Effective small business management An Entrepreneurial Approach
Authors: Norman M. Scarborough
10th Edition
132157462, 978-0132157469
