Given the following information set up the problem in a transportation table and

Question

Given the following information set up the problem in a transportation table and solve for the minimum-cost plan:

Suppose that an inventory carrying cost is increased $2 per unit per period. What will the additional cost of the optimal plan be? (Omit the "$" sign in your response.)

Additional cost           $

PERIOD 1 2 3 Demand 550 700 750 Capacity Regular 500 500 440 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

Explanation / Answer

PERIOD Rate 1 2 3 Cost Revised cost Demand 550 700 750 Capacity 60 Regular 500 500 440 30000 30000 26400 30000 30000 26400 80 Overtime 50 50 50 4000 4000 4000 4000 4000 4000 90 Subcontract 120 120 100 10800 10800 9000 10800 10800 9000 Beginning inv 100 220 190 0 0 0 Rate 0 0 0 1 End Inv 220 190 30 220 190 30 2 440 380 60 Costs Total 129440 Total 129880 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 Additional cost           440

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