A major manufacturer of mobile phones uses inventory, overtime, and subcontracting to accommodate periodic demand fluctuations. The company creates a production plan annually but updates it quarterly. Table 7 below provides the expected demand and available capacities for the companys next four quarters (values are in units). Use the transportation method to design a minimum cost production plan that will satisfy demand for the upcoming year. They have 150 units in inventory at the beginning of the planning period and backordering is not permitted.

1. FillinTable8belowspecifyinghowmanyunitswillbeproducedeachperiodusingthe3typesofcapacity (i.e., regular, overtime, and subcontracting). (15)

2. Include the total cost for the production plan for the year in the last row of Table 8. (5)

Table 7: Demand and capacity data Regular Overtime Subcontracting Quarter Demand Capacity Capacity Capacity 1 690 1050 92 400 2 920 1050 92 400 3 1840 1050 115 400 4 2185 1050 115 400 Regular production cost per unit: Overtime production cost per unit: Subcontracting cost per unit: Inventory holding cost per unit per quarter: Beginning Inventory: $78 $104 $117 $1 150 Units Produced Overtime Subcontracting Table 8: Production plan Production Period Regular Quarter 1 Quarter 2 Quarter 3 Quarter 4 Total Units Total Cost Table 9: Transportation Method Template DEMAND FOR Unused Total Quarter Quarter Quarter Quarter Capacity Capacity 1 2 3 Available Supply Beginning From Inventory Quarter 1 Regular Overtime Subcontracting Quarter 2 Regular Overtime Subcontracting Quarter 3 Regular Overtime Subcontracting Quarter 4 Regular Overtime Subcontracting Total Demand Unmet Demand Table 7: Demand and capacity data Regular Overtime Subcontracting Quarter Demand Capacity Capacity Capacity 1 690 1050 92 400 2 920 1050 92 400 3 1840 1050 115 400 4 2185 1050 115 400 Regular production cost per unit: Overtime production cost per unit: Subcontracting cost per unit: Inventory holding cost per unit per quarter: Beginning Inventory: $78 $104 $117 $1 150 Units Produced Overtime Subcontracting Table 8: Production plan Production Period Regular Quarter 1 Quarter 2 Quarter 3 Quarter 4 Total Units Total Cost Table 9: Transportation Method Template DEMAND FOR Unused Total Quarter Quarter Quarter Quarter Capacity Capacity 1 2 3 Available Supply Beginning From Inventory Quarter 1 Regular Overtime Subcontracting Quarter 2 Regular Overtime Subcontracting Quarter 3 Regular Overtime Subcontracting Quarter 4 Regular Overtime Subcontracting Total Demand Unmet Demand