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 month
Back-order cost	$	3 per unit per month

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

Answer 1

Formula:

K12 =SUM(H12:J12)   copy to K12:K20

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

K9 =SUMPRODUCT(B12:D20,H12:J20)

Minimum total cost of the plan = $ 126,650

b) When inventory carrying cost is increased $2 per unit per period, the optimal solution remain unchanged, however, the cost will change to $ 127,350