Ram Roy\'s firm has developed the following supply, demand, cost, and inventory
ID: 3119352 • Letter: R
Question
Ram Roy's firm has developed the following supply, demand, cost, and inventory data.
Supply Available
Period
Regular Time
Overtime
Subcontract
Demand Forecast
1
40
15
55
50
2
35
15
55
60
3
40
15
55
55
Initial inventory
30units
Regular-time cost per unit
$100
Overtime cost per unit
$160
Subcontract cost per unit
$200
Carrying cost per unit per month
$6
Assume that the initial inventory has no holding cost in the first period and backorders are not permitted.
Allocating production capacity to meet demand at a minimum cost using the transportation method, the total cost is
$nothing
(enter your response as a whole number).
Supply Available
Period
Regular Time
Overtime
Subcontract
Demand Forecast
1
40
15
55
50
2
35
15
55
60
3
40
15
55
55
Explanation / Answer
Initial inventory Regular time cost Overtime Cost Subcontract Cost Demand Period 1 Regular Production Plan Inventory at the end of Period 1 Demand Period 2 Regular Production Plan Overtime Production Plan Inventory at the end of Period 2 Demand Period 3 Regular Production Plan Overtime Production Plan units $ per unit $ per unit $ per unit Units Units Units Units Units Units Units Units Units Units 30 100 160 200 50 40 20 60 35 5 0 55 40 15 Cost Items $ Inventory Carrying Cost Period 1 0 Regular Production Cost Period 1 (40*100) 4000 Overtime Production Cost Period 1 0 Subcontracting Cost Period 1 0 Inventory Holding Cost Period 2 (20*6) 120 Regular Production Cost Period 2 ( 35*100) 3500 Overtime Production Cost Period 2 (5*160) 800 Subcontracting Cost Period 2 0 Inventory Holding Cost Period 3 0 Regular Production Cost Period 3 (40*100) 4000 Overtime Production Cost Period 3(15*160) 2400 Subcontracting Cost Period 3 0 Total Cost 14820
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