Jerusalem Medical Ltd., an israeli producer of portable kidney dialysis units an

Question

Jerusalem Medical Ltd., an israeli producer of portable kidney dialysis units and other medical products, develops a 4-month aggregate plan. Demand and capacity (in units) are forecast as follows: Month 4 300 17 Month 1 Month 2 Month 3 Capacity Source Labor 225 15 12 240 265 28 17 310 300 26 20 336 Regular time Overtime Subcontract Demand 305 The cost of producing each dialysis unit is $875 on regular time, $1,310 on overtime, and $1,500 on a subcontract. Inventory carrying cost is $100 per unit per month. There is to be no beginning or ending inventory in stock and backorders are not permitted. Minimizing cost using the transportation method, the optimal ot is (enter your response as a whole number)

Explanation / Answer

Month 1

Optimal Cost = (225 x $875) + (15 x $1,310)

......................= $216,525

Month 2

Optimal Cost = (265 x $875) + (28 x $1,310) + (17 x $1,500)

......................= $294,055

Month 3

Optimal Cost = (300 x $875) + (26 x $1,310) + (10 x $1,500)

......................= $311,560

Month 4

Optimal Cost = (300 x $875) + (5 x $1,310)

......................= $269,050

Minimum Cost using transportation method, the optimal cost is = $216,525 + $294,055 + $311,560 + $269,050

.................................................................................................... = $1,091,190

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