Create a Level Plan with a Zero Ending Inventory for the Forecast

question 4

Essay

Create a level plan with a zero ending inventory for the forecast shown in the table. There is no beginning inventory and regular production capacity is 300 units. Overtime costs $15 extra and is limited to 25 units per month and subcontracting is limited to 60 units per month and costs $10 per unit. Back orders cost $50 per unit and there is a cost of $5 per month to hold a unit in inventory. What is the total plan cost above the regular production cost?
$$\begin{array} { | l | c | l | l | l | l | } \hline { \text { Month } } & \text { Forecast } & \text { Regular } & \text { Overtime } & \text { Subcontracting } & \begin{array} { c } \text { Ending } \\\text { Inventory }\end{array} \\\hline \text { January } & 250 & & & & \\\hline \text { February } & 300 & & & & \\\hline \text { March } & 400 & & & & \\\hline \text { April } & 350 & & & & \\\hline\end{array}$$

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