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

table

 

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]