Table D.3

The Harper Company is in the process of production planning for the next four quarters. The company follows a policy of a stable workforce and uses overtime and subcontracting to meet uneven forecasted demand. Anticipation inventory is also allowed, but not backorders. Undertime is paid, at a rate of $5.00 per unit. The beginning (or current) inventory is 25 units. Details are shown in the following POM for Windows table.

20) Use the information in Table D.3. Given the information in the optimal tableau, what is the inventory carrying cost, in dollars per unit per quarter? SHOW YOUR WORK

A) less than $1

B) greater than $1 but less than or equal to $2

C) greater than $2 but less than or equal to $3

D) greater than $3

Created by POM-QM for Windows \begin{tabular}{|c|c|c|c|c|c|c|} \hline \multicolumn{7}{|c|}{ Harper Company Solution } \\ \hline Optimal cost =$911 & Period 1 & Period 2 & Period 3 & Period 4 & ExcessCapacity & Capacity \\ \hline Init Inventory & 23 & 2 & & & & 25 \\ \hline Period 1 RegTime & 15 & & & & & 15 \\ \hline Period 1 Overtime & & & & & 5 & 5 \\ \hline Period 1 Subcontract & & & & & 5 & 5 \\ \hline Period 2 RegTime & & 15 & & & & 15 \\ \hline Period 2 Overtime & & 1 & 4 & & & 5 \\ \hline Period 2 Subcontract & & & 1 & & 4 & 5 \\ \hline Period 3 RegTime & & & 15 & & & 15 \\ \hline Period 3 Overtime & & & 5 & & & 5 \\ \hline Period 3 Subcontract & & & 5 & 0 & & 5 \\ \hline Period 4 RegTime & & & & 15 & & 15 \\ \hline Period 4 Overtime & & & & 5 & & 5 \\ \hline Period 4 Subcontract & & & & 5 & & 5 \\ \hline Demand & 38 & 18 & 30 & 25 & 14 & \\ \hline \end{tabular} Created by POM-QM for Windows