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A company that produces chairs has obtained a demand forecast for the next three months. To meet the demand, the company can produce chairs using

A company that produces chairs has obtained a demand forecast for the next three months. To meet the demand, the company can produce chairs using regular production time, overtime, and using a subcontractor. The demand and projected capacities for three production options are in the following table:

Month
1 2 3
Demand (units) 25,000 35,000 45,000
Regular Capacity 35,000 30,000 20,000
Overtime Capacity 5,000 5,000 5,000
Subcontractor Capacity 7,500 2,500 3,500

The company can produce chairs at a cost of $50/unit in regular time and $70/unit using overtime. The subcontractor charges $90/unit to produce chairs. Placing chairs in storage for future use costs the company $20/unit per month.

(a) Construct a network representation of the production problem.

(b) Is the company capable of meeting the demand requirements?

(c) Convert the problem into a linear program.

(d) Find the minimum cost to meet the demand requirements. What will be the cost to produce the chairs?

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