13.13 Ram Roy\'s firm has developed the following demand, cost, and inventory da
ID: 358610 • Letter: 1
Question
13.13 Ram Roy's firm has developed the following demand, cost, and inventory data. Allocate production ity to meet demand at a minimum cost using the transpo method. What is the cost? Assume that the initial inventor holding cost in the first period and backorders are not pe Supply Available y has no rmitted. REGULAR TIME 30 35 30 DEMAND PERIOD OVERTIME SUBCONTRACTFORECAST 10 12 10 40 50 40 Initial inventory Regular-time cost per unit Overtime cost per unit Subcontract cost per unit Carrying cost per unit per month 20 units $100 $150 $200Explanation / Answer
Explanations:
total cost for period 1 = 20 X regular time cost per unit = $ 2000
cost for period 2 = 35 X regular time cost per unit + 12 X Overtime cost per unit + 3 X Subcontract cost per unit cost for period 2 = 35 X 100 + 12 X 150 + 3 X 200 = $ 5900
period 3 = 30 X 100 + 10 X 150 = $ 4500
?out of the 5 subcontracts available in period 2 ,only 3 subcontracts have been utilized to meet the demand .The rest of the demand is met from regular time and overtime . Because subcontract cost is more ,it is used only when the regular and overtime capacities are exhausted . In period 2 , we have used 35 regular time ,12 over time and still we are short of 3 to meet the demand of 50.
Period Regular time Overtime Subcontract Demand forecast Total cost 1 30(20)+20(Initial inventory) 10 5 40 2000 2 35(35) 12(12) 5(3) 50 5900 3 30(30) 10(10) 5 40 4500 Capacity 95 32 15 142/130 Total cost=$12,400Related Questions
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