Use Either the Transportation Method or Linear Programming to Develop

question 78

Essay

Use either the transportation method or linear programming to develop an optimum aggregate plan, given the following data: $$\begin{array} { c } &&{ \text { Period } } \\\text { Demand } & 130 & 160 & 140 \\\text { Capacity } & & & \\\text { Regular } & 100 & 100 & 100 \\\text { Overtime } & 20 & 20 & 20 \\\text { Subcontracting } & 30 & 30 & 30 \\\text { Costs } & & & \\\text { Regular Time: } & & \$ 10 \text { per unit } \\\text { Overtime: } & & \$ 15 \text { per unit } \\\text { Subcontracting: } & & \$ 20 \text { per unit } \\\text { Carrying: } & & \$ 2 \text { per unit } \\\text { Backorder: } & & \$ 5 \text { per unit }\end{array}$$

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Definitions:

Production Budget

An estimate of the total number of units to be produced in a given period, used for planning raw material purchases and labor needs.

Static Budget

A budget based on a fixed level of activity and does not change with the actual levels of output achieved.

Flexible Budget

A budget that adjusts or flexes with changes in volume or activity levels of the organization, allowing for more accurate budgeting and performance evaluation.

Volatile Demand

Demand for a product or service that experiences frequent, unpredictable changes often leading to challenges in inventory management and production planning.