Refer to the data in problem 6. If backorders are allowed, determine the total cost of a plan if overtime is limited to 40 units per month and subcontracting is limited to 20 units per month. Backordering costs are $30 per unit.

Data from problem 6

Given the following forecast and cost information, determine the total cost of a plan that uses regular time production output of 600 units per month, overtime is used when needed up to a maximum of 60 units per month, and subcontracting is used if additional units are needed to meet the forecast:

Regular time cost = $40 per unit
Overtime cost = $60 per unit
Subcontracting cost = $80 per unit
Holding cost = $10 per unit per month

Transcribed Image Text:

Month 690 Forecast 570 600 630 670 650