Sodaco runs a plant that makes and bottles private label soft drinks, sold directly to retailers. One

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Question:

Sodaco runs a plant that makes and bottles private label soft drinks, sold directly to retailers. One client has recently placed an order for one of the SKU's with the following delivery schedule over the next ten weeks (one period=one week):

PERIOD DEMAND

1 3000

2 3100

3 3200

4 3100

5 2900

6 2800

7 2800

8 2900

9 2800

10 3000

The order is of one-time character - there are no promises for future orders from the same client.

Sodaco needs your help to develop a production plan that minimizes the total costs. Costs are incurred both from holding inventory of finished goods and from changeovers in the production line. Sodaco estimates these costs according to the following:

Inventory holding costs: $0.1 per itemand week
Production setup costs: $800 per production run

Any products delivered in the same week as manufactured incur no holding costs. Holding costs are then incurred for every week after the manufacturing week. Capacity is not an issue at this point.

Also try the POQ heuristic. Assume the optimal time between runs,t is 4.

Using the POQ heuristic, what is the total cost for producing the ordered units? Please give your answer in dollars without commas or currency symbols.