A manager is applying the transportation model of linear programming to solve an aggregate planning problem. Demand in period 1 is 100 units, 100 units in period 2, and 175 units in period 3. The manager has 125 hours of regular employment available for $10/hour each period. In addition, 25 hours of overtime are available for $15/hour each period. If holding costs are $6 per unit each period, how many hours of overtime should be used in period 2? (Assume demand must be met in all periods for the lowest possible cost and that production is 1 unit per hour.)
A) 0
B) 5
C) 15
D) 20
E) 25

Question

Quizplus · Accepted Answer

The optimal solution is to use 0 hours of overtime in period 2. This is because the cost of overtime is $15/hour, while the cost of regular time is only $10/hour. Therefore, it is cheaper to use regular time to meet demand in period 2.

A Manager Is Applying the Transportation Model of Linear Programming