Question:

A manufacturer of commercial furniture develops an 8-month aggregate plan. Demand and capacity (in units) for display cabinet are forecast as follows:

The cost of producing each unit is $1000 on regular time, $1300 on overtime, and $1800 on a subcontract. Inventory carrying cost is $200 per unit per month. There is no beginning and ending inventory in stock and no backorders are permitted from period to period.

1. Setup a production plan that minimizes cost. Use regular time capacity first, then overtime, and then subcontracting. What is this plan’s cost?
2. Through better planning, regular time production can be set at exactly the same amount, 275 units per month. Does this alter the solution? Why or why not?
3. If overtime costs rise from $1300 to $1400, will your answer to part (a) change? What if overtime costs fall to $1200?

Price: $2.99

Solution: The downloadable solution consists of 4 pages
Deliverable: Word Document