Yu Amy Xia has developed a specialized airtight vacuum bag to extend the freshness of seafood shipped to restaurants. She has put together the following demand cost data:
|
Quarter
|
Forecast (units)
|
Regular Time
|
Overtime
|
Subcontract
|
|
1
|
500
|
400
|
80
|
100
|
|
2
|
750
|
400
|
80
|
100
|
|
3
|
900
|
800
|
160
|
100
|
|
4
|
450
|
400
|
80
|
100
|
Initial inventory = 250 units
Regular time cost = $1.00/unit
Overtime cost = $1.50/unit
Subcontract cost = $2.00/unit
Carrying cost = $0.20/unit/quarter
Back order cost = $0.50/unit/quarter
Yu decides that the initial inventory of 250 units will incur the 20¢/unit cost from each prior quarter (unlike the situation in most other companies, where a 0 unit cost is assigned).
a) Find the optimal plan using the transportation method.
b) What is the 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?