# Transportation setup | Business & Finance homework help

EXAMPLE 2

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After reviewing the plan developed in the preceding example, planners have decided to develop an alternative plan. They have learned that one person is about to retire from the company. Rather than replace that person, they would like to stay with the smaller workforce and use overtime to make up for the lost output. The reduced regular-time output is 280 units per period. The maximum amount of overtime output per period is 40 units. Develop a plan and compare it to the previous one.

SOLUTION

 Refer to Example 3 in the textbook. Given the following information set up the problem in a transportation table and solve for the minimum-cost plan: (Omit the “\$” sign in your response.)

 PERIOD 1 2 3 Demand 550 700 750 Capacity Regular 500 500 500 Overtime 50 50 50 Subcontract 120 120 100 Beginning inventory 100 Costs Regular time \$ 60 per unit Overtime \$ 80 per unit Subcontract \$ 90 per unit Inventory carrying cost \$ 1 per unit per month Back-order cost \$ 3 per unit per month

 Minimum total cost \$ [removed]