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H&W company are scheduling the monthly production of a milling tool for the next 4 months. Forecasted monthly demands are 400, 700, 680, 720

 

H&W company are scheduling the monthly production of a milling tool for the next 4 months. Forecasted monthly demands are 400, 700, 680, 720 units, respectively. Demands must be met and no shortage is allowed. The company can produce a maximum 500 units per month. From the second month, the company can either employ overtime or outsource the product to another company to increase the production. Employing overtime will increase the production by 150 units per month and outsourcing will increase the production by 120 units per month. The production cost is $20/unit in the first two months and $18/unit in the second two months. Employing overtime will increase the unit cost by $5 and outsourcing will increase the unit cost by $3. Inventory cost is $4 per unit per month. How should the production be scheduled so as to minimize the total cost. Please formulate it as a transportation problem. Clearly state the decision variables, draw the table, and solve it using the greedy algorithm. Based on the solution, show the production schedule and the final total cost.

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