Question
A glass store is developing a production plan for producing glass vases. The demand forecast is 200 units for January; 300 units for February; 250
A glass store is developing a production plan for producing glass vases. The demand forecast is 200 units for January; 300 units for February; 250 units for March; and 250 units for April. Consider using regular production, overtime production, and subcontracting (not necessarily all of them) to satisfy the demand. Regular production capacity is 200 units per month, and overtime production capacity is 50 units per month. There is no constraint on the capacity of subcontracting. Cost is $10/unit for regular time production, $15/unit for overtime production, and $20/unit for subcontracting. The inventory cost is $6/unit /month on average inventory. Backlog (backorder) is NOT allowed. The inventory at the beginning of January is zero. The inventory at the end of April should be zero.
Develop an aggregate production plan using a level strategy that achieves the minimum total cost. Based on your production plan, what is the totalsubcontracting cost (for all the products produced using subcontracting)?
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