Josie Gall\'s firm has developed the following supply, demand, cost and inventor

ID: 430144 • Letter: J

Question

Josie Gall's firm has developed the following supply, demand, cost and inventory data.

Period reg.time OT subcont. demand forecast

1 30 15 10 40

2 35 15 10 50

3 30 20 10 50

intial invt. = 20 units

reg time cost per unit = $100

OT cost per unit $150

Subcont cost per $250

Carrying cost per unit per month $2

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 $???

Supply Available :

Period Regular Time Inventory Over time Total production Sub Contract Demand Forecast

1 30 20 0 50 0 40

2 35 0 15 50 0 50

3 30 10 10 50 0 50

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Cost Calculation:

Period Regular time Inventory Over time

1 30*$100=$3,000 0 0

2 35*$100=$3,500 0 15* $150=$2,250

3 30*$100=$3,000 10*$2=$20 10*$150=$1,500

ADDing Regular time cost + invnetory cost + over time cost =

$3,000 + $3,500+$3,000 + $20 + $2,250 +$1,500

=$13,270

Total Cost is =$13,270

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