Question
A manufacturing firm uses a level utilization production-planning horizon of three months. They have developed a forecast for the coming three months that appears in
A manufacturing firm uses a level utilization production-planning horizon of three months. They have developed a forecast for the coming three months that appears in the table. They can add no more than 5% of their production capacity as overtime and can order no more than 10% of a month's regular capacity via subcontractors. The company has a zero backorder policy but has space for a maximum of 250 items in their finished-goods inventory. All extra costs are shown in the table.
October | November | December |
Forecasted Demand | 2,100 | 1,900 | 2,350 |
Regular Capacity | 2,000 | 2,000 | 2,000 |
Workforce level | |||
Overtime ($50/unit) | |||
Subcontracting ($120/unit) | |||
Inventory holding ($15/unit) | |||
Total Cost |
Use the information in Table 10.1. What is the total cost (overtime, subcontracting and inventory holding costs) over the planning horizon (i.e. for the months of October, November and December combined) corresponding to the least cost production plan?
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