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LMNO Gaskets has seeks an optimal production plan for a product to meet demand over the upcoming three quarters. Demand in each of the three

LMNO Gaskets has seeks an optimal production plan for a product to meet demand over the upcoming three quarters. Demand in each of the three quarters and production, overtime, and subcontracting capacities are reported in the table below. The relevant costs are:

  • Regular time production cost is $20/unit.
  • Overtime production cost is $30/unit.
  • Subcontracting cost is $34/unit.
  • Inventory is held at a cost of $5/unit/quarter.
  • Units may be backordered at a cost of $8/unit/quarter
Production Resource Demand in Quarter Capacity
Q1 Q2 Q3
Regular Time Q1 600
Overtime Q1 300
Subcontract Q1 650
Regular Time Q2 600
Overtime Q2 300
Subcontract Q2 650
Regular Time Q3 600
Overtime Q3 300
Subcontract Q3 650
Demand in Quarter 1100 1940 700

What is the cost of the optimal production plan (Use EXCEL Solver)?

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