Supplement D Linear Programming

Table D.2

Bahouth Enterprises produces a variety of hookahs for clients around the globe. Their small plant has a highly flexible workforce that can switch between products seamlessly. They forecast using a six-month planning period and have a demand forecast as shown in the table. The per-unit costs for each output option the sales and operations planner has at his disposal are indicated in the table. Regular output costs $40 per unit, overtime production is $60 per unit, and subcontracting is $70 per unit. Holding inventory from one month to the next costs $2 per unit per month and a backlog costs $5 per unit per month. Regular plant capacity is 300 units per month.

Period		1	2	3	4	5	6	Total
Forecast		400	350	500	400	500	200	2,350
Output
Regular	$40							1,800
Overtime	$60							0
Subcontract	$70							0
Inventory
Beginning		0
Ending	$2
Average								0
Backlog	$5							2,250
Costs

19) Use the information in Table D.2. The plant has no limits on the number of units produced by overtime or subcontractors and adopts a chase plan strategy for the six-month planning period. What is the cost for month 6 of their chase plan? SHOW YOUR WORK

A) $8,000

B) $9,852

C) $11,317

D) $12,631