Question

In: Operations Management

Create a level plan with a zero ending inventory for the forecast shown in the table....

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

February

300

March

400

April

350

Solutions

Expert Solution

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