Question
A company has estimated the following demand for forthcoming 6 work periods. If the capacity and costs parameters of production are: (1) Regular capacity of
A company has estimated the following demand for forthcoming 6 work periods. If the capacity and costs parameters of production are:
(1) Regular capacity of 600 units per period at production cost of $50 per unit.
(2) Overtime at an additional cost of $20 per unit up to a maximum of 50 units/period.
(3) Subcontract at an additional cost of $25 per unit up to a maximum of 100 units/period.
(4) Inventory carrying cost is $15 per unit-period.
Recommend a least cost aggregate production plan. No need to calculate costs.
| Period | Forecast | Regular Production | Overtime Production | Inventory | Subcontract Quantity |
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| 1 | 400 |
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| 2 | 500 |
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| 3 | 800 |
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| 4 | 600 |
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| 5 | 900 |
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| 6 | 700 |
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| Total |
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