In: Operations Management
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. Subcontracting is limited to 60 units per month and costs $10 per unit. There is a cost of $5 per month to hold a unit in inventory. What is the total plan cost (i.e. subcontracting + inventory)?
Hint: In a level production plan, production is held constant in every time period. Use regular production, subcontracting, and inventory to create the plan.
Month |
Forecast |
Regular |
Subcontracting |
Monthly Inventory Change |
Ending Inventory |
January |
250 |
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February |
300 |
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March |
400 |
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April |
350 |
Below is the screenshot of the formula applied -
Below is the screenshot of the result -