Question
A large St. Louis feed mill, Robert Orwig Processing, prepares its 6-month aggregate plan by forecasting demand for 50-pound bags of cattle feed as follows:
A large St. Louis feed mill, Robert Orwig Processing, prepares its 6-month aggregate plan by forecasting demand for 50-pound bags of cattle feed as follows: January,1,200 bags; February,1,600 bags; March,1,450 bags; April,1,650 bags; May, 1,600 bags; and June,1,600 bags.
The feed mill plans to begin the new year with no inventory left over from the previous year and backorders are not permitted. It projects that capacity (during regular hours) for producing bags of feed will remain constant at 900 until the end of April, and then increase to 1,100 bags per month when a planned expansion is completed on May 1. Overtime capacity is set at 500 bags per month until the expansion, at which time it will increase to 600 bags per month.
A friendly competitor in Sioux City, Iowa, is also available as a backup source to meet demand long dash but can provide only 300 bags total during the 6-month period. Develop a 6-month production plan for the feed mill using the transportation method. Cost data are as follows:
Regular-time cost per bag (until April 30) | $13.00 |
Regular-time cost per bag (after May 1) | $12.00 |
Overtime cost per bag (during entire period) | $17.00 |
Cost of outside purchase per bag | $19.50 |
Carrying cost per bag per month | $1.00 |
Developing a 6-month production plan for the feed mill using the transportation method, the total cost is _____
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