Handout 5 A Manufacturing Company Production Schedule A manufacturing company de
ID: 350851 • Letter: H
Question
Handout 5 A Manufacturing Company Production Schedule A manufacturing company desines to. develop a production sohiedule for the following year, by quarters. The productive capaoity, the produat demand, the unit pnoduction cost for each period, and the per unit cost offholdingiexaess units iniinsentiony arie as fiollows: Holding Cost Per Unit (20% Production Cost) $1.00 $1.30 $1.45 N/A Unit Production Cost Quarter Pnoductive Capacity (in units) Product Demand (in units) 1 2 3 4 650 650 650 650 400 600 500 750 $5.00 $6.50 $7.25 $9.00 Using the transportation problem, find the optimal production strategy.Explanation / Answer
The transportation table for given problem is as follows:
(Consider no backlog or Backordering is allowed)
Demand for
Qrt 1
Qrt 2
Qrt 3
Qrt 4
Unused Capacity
Capacity Avail
Supply (from)
Quantity
Cost
Quantity
Cost
Quantity
Cost
Quantity
Cost
Quantity
Cost
Qrt 1
$5.00
5+1 = $6.00
6+1 =
$7.00
$8.00
0
$0
650
Qrt 2
--
$6.50
6.5+1.3=
$7.80
7.8+1.3
= $9.10
0
$0
650
Qrt 3
--
--
$7.25
7.25+1.45
= $8.70
0
$0
650
Qrt 4
--
--
--
$9.00
0
$0
650
Demand
400
600
500
750
0
2550
Monthly cost
$2,000
$3,775
$3,625
$7,155
$16,555
Total Cost
Demand for
Qrt 1
Qrt 2
Qrt 3
Qrt 4
Unused Capacity
Capacity Avail
Supply (from)
Quantity
Cost
Quantity
Cost
Quantity
Cost
Quantity
Cost
Quantity
Cost
Qrt 1
400
$5.00
250
$6.00
0
$7.00
0
$8.00
0
$0
650
Qrt 2
--
350
$6.50
0
$7.80
0
$9.10
300
$0
650
Qrt 3
--
--
500
$7.25
150
$8.70
0
$0
650
Qrt 4
--
--
--
650
$9.00
0
$0
650
Demand
400
600
500
750
300
2550
Monthly cost
$2,000
$3,775
$3,625
$7,155
$16,555
Total Cost
In first month demand is 400 and supply is 650 units, thus produce allocate 400 unit in Qrt 1 for Qrt 1 demand.
In second Quarter, the lowest cost is $6.00 if the item is carried from Qrt 1 to Qrt 2, thus allocate remaining capacity of Qrt 1 to Qrt 2 @ of $6.00. Thus, the capacity of Qrt 1 is exhausted. For remaining demand of 350 units in Qrt 2 is allocate 350 units in Qrt 2. In Qrt 2 the unused capacity is 650 – 350 = 300 units
For Qrt 3, lowest cost is 7.25 in Qrt 3, and demand is 500. Thus, allocate 500 units of Qrt 3 for demand of Qrt3. In Qrt 3 the unused capacity is 650 – 500 = 150 units
For Qrt 4, lowest cost is $8.70 if the item is carried from Qrt 3 to Qrt 4, thus allocate remaining capacity (150 units) of Qrt 3 to Qrt 4 @ of $8.70. Thus, the capacity of Qrt 3 is exhausted. For remaining demand of 650 units in Qrt 4 is allocate 650 units in Qrt 4.
Total Cost = (400)(5.00) + (250)(6.00) + (350)(6.5) + (500)(7.25) + (150)(8.70) + (650)(9.00)
Total cost = $16,555
Demand for
Qrt 1
Qrt 2
Qrt 3
Qrt 4
Unused Capacity
Capacity Avail
Supply (from)
Quantity
Cost
Quantity
Cost
Quantity
Cost
Quantity
Cost
Quantity
Cost
Qrt 1
$5.00
5+1 = $6.00
6+1 =
$7.00
$8.00
0
$0
650
Qrt 2
--
$6.50
6.5+1.3=
$7.80
7.8+1.3
= $9.10
0
$0
650
Qrt 3
--
--
$7.25
7.25+1.45
= $8.70
0
$0
650
Qrt 4
--
--
--
$9.00
0
$0
650
Demand
400
600
500
750
0
2550
Monthly cost
$2,000
$3,775
$3,625
$7,155
$16,555
Total Cost
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