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Question
A manufacturing firm uses a level utilization production-planning horizon of three months. They have developed a forecast for the coming three months that appears in the table. They can add no more than 10% of their production capacity as overtime and can order no more than 10% of a month's regular capacity via subcontractors. The company has a zero backorder policy but has space for a maximum of 150 items in their finished-goods inventory. If all extra costs are shown in the table, what is the minimum cost sales and operations plan?
| January | February | March | |
| Forecasted Demand | 1,100 | 950 | 1,350 |
| Regular Capacity | 1,000 | 1,000 | 1,000 |
| Workforce level | |||
| Overtime ($40/unit) | |||
| Subcontracting ($100/unit) | |||
| Inventory holding ($10/unit) | |||
| Total Cost |
Answer
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