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    Widget producer: Production Plan that minimizes cost using t

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    Widget producer develops 4 month aggregate plan. Demand and capacity (in units) are forecast below

    CAPACITY SOURCE Month 1 Month 2 Month 3 Month 4
    Labor
    Regular time 235 255 290 300
    Overtime 20 24 26 24
    Subcontract 12 15 15 17
    Demand 255 294 321 301

    The cost of producing each widget is $985 on regular time, $1310 on overtime, and $1500 subcontract. Carrying cost is $100 per unit per month. There is no beginning or ending inventory in stock and backorders are not permitted. Set up production plan that minimizes cost using transportation method.

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    Solution Preview

    Please see the attached file - you can see the set up in tools > solver

    Capacity Labour Source Month 1 Month 2 Month 3 Month 4 Cost
    Regular Time 235 255 290 300 $985.00
    Over Time 20 24 26 24 $1,310.00
    Subcontract 12 15 15 17 $1,500.00
    Demand 255 294 321 301
    Carrying Cost per unit per month $100.00

    Decision Variables Month 1 Month 2 Month 3 Month 4
    Regular Time 235.00 255.00 290.00 300.00
    Over ...

    $2.19

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