Question: It costs $12 to make a single unit using regular production and $15 to make a single unit using overtime production. Total overtime production is

It costs $12 to make a single unit using regular production and $15 to make a single unit using overtime production. Total overtime production is limited to 500 units for the five month period. The manufacturing plant has a regular production capacity of 250 units per month and 50 units in inventory at the start of the planning period. There is a $5 per unit charge for holding inventory at the end of each month and a limit of 250 units ending inventory for any period. What is the lowest cost production plan if the forecast must be met with a zero ending inventory each month?

Month

Forecast

January

250

February

200

March

300

April

400

May

500

A.$19,750
B.$19,500
C.$20,850
D.$19,150
E.$20,550

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