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LMNO Gaskets has formulated a production plan for a product to meet demand over the upcoming four quarters. Demand in each of the four
LMNO Gaskets has formulated a production plan for a product to meet demand over the upcoming four quarters. Demand in each of the four quarters and production, overtime, and subcontracting capacities are reported in the table below, in addition to the feasible production plan. The relevant costs are: Regular time production cost is $15/unit. Overtime production cost is $19/unit. Subcontracting cost is $21/unit. Inventory is held at a cost of $1/unit/quarter. Production Demand in Quarter Capacity Resource Q1 Q2 Q3 Q4 Regular Time Q1 550 550 Overtime Q1 150 100 250 Subcontract Q1 500 Regular Time Q2 550 550 Overtime Q2 250 250 Subcontract Q2 500 500 Regular Time Q3 550 550 Overtime Q3 180 70 250 Subcontract Q3 Regular Time Q4 500 550 550 Overtime Q4 250 250 Subcontract Q4 500 500 Demand in Quarter 700 1400 730 1370 What is the total number of units held in inventory for the year? What is the total regular time production cost? What is the total overtime production cost for the year? What is the total cost for the year?
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