Question: LMNO Gaskets has formulated a production plan for a product to meet demand over the upcoming four quarters. Demand in each of the four

LMNO Gaskets has formulated a production plan for a product to meet demand over the upcoming four quarters. Demand in each of the four quarters and production, overtime, and subcontracting capacities are reported in the table below, in addition to the feasible production plan. The relevant costs are: Regular time production cost is $10/unit. Overtime production cost is $14/unit. Subcontracting cost is $18/unit. Inventory is held at a cost of $1/unit/quarter. Units may be backordered at a cost of $4/unit/quarter. Production Resource Regular Time Q1 Overtime Q1 Subcontract Q1 Regular Time Q2 Overtime Q2 Subcontract Q2 Regular Time Q3 Overtime Q3 Subcontract Q3 Demand in Quarter Demand in Quarter Q2 0 20 0 550 250 470 0 40 0 1330 Q1 550 230 0 0 0 0 40 40 0 860 What is the inventory cost for the year? What is the backorder cost for the year? Q3 0 0 0 0 0 30 What is the total cost for the year? 510 160 0 700 What is the total overtime production cost for the year? Capacity 550 250 500 550 250 500 550 250 500

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