Bits and Pieces uses overtime, inventory, and subcontract-ing to absorb fluctuations in demand. An annual production plan is devised and updated quarterly. Expected demandover the next four quarters is 600, 800, 1600, and 1900units, respectively. The capacity for regular production is1000 units per quarter with an overtime capacity of 100units a quarter. Subcontracting is limited to 500 units aquarter. Regular production costs $20 per unit, overtime$25 per unit, and subcontracting $30 per unit. Inventoryholding costs are assessed at $3 per unit per period. There isno beginning inventory. Design a production plan that willsatisfy demand at minimum cost.
Bits and Pieces uses overtime, inventory, and subcontract-ing to absorb fluctuations in demand. An annual production plan is devised and updated quarterly. Expected demandover the next four quarters is 600, 800, 1600, and 1900units, respectively. The capacity for regular production is1000 units per quarter with an overtime capacity of 100units a quarter. Subcontracting is limited to 500 units aquarter. Regular production costs $20 per unit, overtime$25 per unit, and subcontracting $30 per unit. Inventoryholding costs are assessed at $3 per unit per period. There isno beginning inventory. Design a production plan that willsatisfy demand at minimum cost.
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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Bits and Pieces uses overtime, inventory, and subcontract-
ing to absorb fluctuations in demand. An annual production
plan is devised and updated quarterly. Expected demand
over the next four quarters is 600, 800, 1600, and 1900
units, respectively. The capacity for regular production is
1000 units per quarter with an overtime capacity of 100
units a quarter. Subcontracting is limited to 500 units a
quarter. Regular production costs $20 per unit, overtime
$25 per unit, and subcontracting $30 per unit. Inventory
holding costs are assessed at $3 per unit per period. There is
no beginning inventory. Design a production plan that will
satisfy demand at minimum cost.
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