Ram Roy\'s firm has developed the following supply, demand, cost, and inventory
ID: 358280 • Letter: R
Question
Ram Roy's firm has developed the following supply, demand, cost, and inventory data Supply Available Demand Regular Time 40 35 30 ertime Subcontract Fore 15 15 20 cast Period 10 10 10 40 60 50 20 units $100 $150 $250 $6 Initial inventory Regular-time cost per unit Overtime cost per unit Subcontract cost per unit Carrying cost per unit per month 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 S (enter your response as a whole number).Explanation / Answer
Period 1:
Demand is 40 units
Already we have Initial inventory of 20 units. So we need 20 units. So we produce 20 units in regular time.
Cost in period 1= 20*100 = $2000
Period 2:
Demand is 60 units and initial inventory in period 2 is zero.
So we have to produce 60 units. 35 units in regular time, 15 units in overtime and 10 units in sub contract
Cost in period 2 = 35*100 + 15*150 + 10*250 = 8250
Period 3:
Demand is 50 units and initial inventory in period 2 is zero.
So we have to produce 50 units. 35 units in regular time and 15 units in overtime.
Cost in period 3= 35*100 + 15*150 = 5750
Total cost = 2000 + 8250+5750 = $16000
Allocating production capacity to meet demand at a minimum cost using the transportation method, the total cost is $16000
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