A manufacturing firm uses a level utilization production-planning horizon of three months. They have developed a forecast for the coming three quarters that appears in the table
They can add no more than 10% of their production capacity as overtime and can order no more than 10% of a month's regular capacity via subcontractors. The company has a zero backorder policy but has space for a maximum of 100 items in their finished-goods inventory. If all extra costs are shown in the table, what is the minimum cost sales and operations plan?
January February March
Forecasted Demand 1100 950 1350
Regular Capacity 1000 1000 1000
Workforce level
Overtime ($40/unit)
Subcontracting ($100/unit)
Inventory holding ($10/unit)
Total Cost
Quantities appear in the upper section of the spreadsheet; costs are totaled at the bottom of each column.
January February March
Forecasted Demand 1100 950 1350
Regular Capacity 1000 1000 1000
Workforce level 1000 1000 1000
Overtime ($40/unit) 100 95 135
Subcontracting ($100/unit) 0 0 70
Inventory holding ($10/unit) 0 145 0
Total Cost 4000 5250 12400
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