A foundry produces cast-iron ingots. While preparing a three month aggregate plan, the operations manager uncovered the following information: The cost of producing a batch of ingots is $100 per regular shift hour, and $140 for overtime hours. Inventory carrying cost is $4 per batch per month. There are 50 batches of inventory left over from December.
Month Regular Time Capacity (batches) OT Capacity (batches) Demand (batches)
Jan. 2,880 355 3,000
Feb. 2,780 315 2,750
March 2,760 305 2,950
Use the transportation method and assume that backlogs are not permitted. Subcontracting is not available.
Required:
a. What is the optimal cost?
b. How much unused regular time capacity is there?
c. How much unused overtime time capacity is there?
d. What is the optimal cost now?
Answers: 2
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