The Baily Corporation has developed a specialized software program that improves inventory control capability. The following...
The Baily Corporation has developed a specialized software program that improves inventory control capability. The following table/information provides the necessary data to evaluate:
| quarter | forecast(units) | regular time | overtime | sub-contract |
| 1 | 500 | 400 | 80 | 100 |
| 2 | 750 | 400 | 80 | 100 |
| 3 | 900 | 800 | 160 | 100 |
| 4 | 450 | 400 | 80 | 100 |
Initial Inventory = 200 units
Regular Time Cost = $2.50/unit
Overtime Cost = $1.00/extra per unit
Subcontracting Cost = $4.00/unit
Carrying Cost = $.50/unit
Back-Order Cost = $.75/unit
The company decides that the initial inventory of 200 units will incur the 50¢/unit cost from each prior quarter.
a. Find the optimal plan using the transportation method.
b. What is the total cost of the plan?
c. Does any regular time capacity go unused? If so, how much in which periods?
d. What is the extent of backordering in units and dollars?
Homework Answers
Below is the screenshot of the LP Table -
Below is the screenshot of the solver
Below is the result -
From above -
b. What is the total cost of the plan - 6677.5
c. Does any regular time capacity go unused - No, regular time will be completely utilized
d. What is the extent of backordering in units and dollars - zero
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