The production planning period for flat-screen monitors at Louisiana's Roa Electronics, Inc., is 4 months. Cost data are as follows:
|
Regular-time cost per monitor
|
$70
|
|
Overtime cost per monitor
|
$110
|
|
Subcontract cost per monitor
|
$120
|
|
Carrying cost per monitor per month
|
$4
|
For each of the next 4 months, capacity and demand for flat screen monitors are as follows:
|
|
Period
|
|
|
Month 1
|
Month 2
|
Month 3
|
Month 4
|
|
Demand
|
2,000
|
2,500
|
1,500
|
2,100
|
|
Capacity
|
|
|
|
|
|
Regular Time
|
1,500
|
1,600
|
750
|
1,600
|
|
Overtime
|
400
|
400
|
200
|
400
|
|
Subcontract
|
600
|
600
|
600
|
600
|
CEO Mohan Roa expects to enter the planning period with 500 monitors in stock. Back ordering is not permitted (meaning, for example, that monitors produced in the second month cannot be used to cover first month's demand). Develop a production plan that minimizes costs using the transportation method.