a. Given the following forecast and steady regular output of 550 every month, what total cost would result if overtime is limited to a maximum of 40 units a month, and subcontracting is limited to a maximum of 10 units a month? Unit costs are:
Regular output $ 20
Overtime $ 30
Subcontract $ 25
Average Inventory $ 10
Backlog $ 18

b. Suppose now that backlogs are not allowed. Modify your plan from part a to accommodate that new condition as economically as possible. The limits on overtime and subcontracting remain the same.

  • CreatedDecember 30, 2014
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