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Create a Minimum Cost Chase Plan for the Forecast Shown

Question 59

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Create a minimum cost chase plan for the forecast shown in the table. There is no beginning inventory and regular production capacity is 350 units. Overtime costs $20 extra and is limited to 50 units per month and subcontracting is limited to 100 units per month and costs $15 per unit. Back orders cost $40 per unit and there is a cost of $5 per month to hold a unit in inventory. There is room for only 100 units in inventory. What is the total plan cost above regular production cost?
 Month  Forecast  Regular  Overtime  Subcontracting  Ending  Inventory  January 250 February 400 March 500 April 350\begin{array} { | l | c | l | l | l | l | } \hline { \text { Month } } & \text { Forecast } & \text { Regular } & \text { Overtime } & \text { Subcontracting } & \begin{array} { c } \text { Ending } \\\text { Inventory }\end{array} \\\hline \text { January } & 250 & & & & \\\hline \text { February } & 400 & & & & \\\hline \text { March } & 500 & & & & \\\hline \text { April } & 350 & & & & \\\hline\end{array}

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Total cost for this chase plan is 50($20...

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