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Bits and Pieces uses overtime, inventory, and subcontracting to absorb fluctuations in demand. An annual production plan is devised and updated quarterly. Expected demand over
Bits and Pieces uses overtime, inventory, and subcontracting to absorb fluctuations in demand. An annual production plan is devised and updated quarterly. Expected demand over the next four quarters is and units, respectively. The capacity for regular production is units per quarter with an overtime capacity of units a quarter. Subcontracting is limited to units a quarter. Regular production costs $ per unit, overtime $ per unit, and subcontracting $ per unit. Inventory holding costs are assessed at $per unit per period. There is no beginning inventory. Design a production plan that will satisfy demand at minimum cost.
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