Question

Given the following information set up the problem in a transportation table and solve for the minimum-cost plan:

PERIOD 1 2 3 Demand 550 700 750

Capacity Regular 500 500 440

Overtime 50 50 50

Subcontract 120 120 100

Beginning inventory 100

Costs Regular time $ 60 per unit

Overtime $ 80 per unit

Subcontract $ 90 per unit

Inventory carrying cost $ 1 per unit

per period Back-order cost $ 3 per unit per period

Suppose that an inventory carrying cost is increased to $2 per unit per period. What will the additional cost of the optimal plan be? (Omit the "$" sign in your response.)

Additional cost $

Answer 1

Formulas:

K12 =SUM(H12:J12) copy to K12:K20

H21 =SUM(H12:H20) copy to H21:J21

K9 =SUMPRODUCT(B12:D20,H12:J20)  

Total cost of plan = $ 126,650

With inventory carrying cost of $ 2 , the revised plan is as follows:

Additional cost = 127000 - 126650 = $ 350