# Haifa Instruments, an Israeli producer of portable kidney dialysis units and other medical products, develops an 8-month

## Question:

Haifa Instruments, an Israeli producer of portable kidney dialysis units and other medical products, develops an 8-month aggregate plan. Demand and capacity (in units) are forecast as shown in the table below. The cost of producing each dialysis unit is $1,000 on regular time,$1,300 on overtime, and $1,500 on a subcontract. Inventory carrying cost is$100 per unit per month. There is no beginning or ending inventory in stock.

(a) Set up a production plan, using the transportation model that minimizes cost. What is this plan's cost?
(b) Through better planning, regular time production can be set at exactly the same value, 275 per month. Does this alter the solution?
(c) If overtime costs rise from $1,300 to$1,400, does this change your answer to part (a)? What if they fall to \$1,200?

Ending Inventory
The ending inventory is the amount of inventory that a business is required to present on its balance sheet. It can be calculated using the ending inventory formula                Ending Inventory Formula =...
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