It costs $10 to make a single unit using regular production and $15 to make a single unit using overtime production. Total overtime production is limited to 1000 units for the five month period
The manufacturing plant has a regular production capacity of 250 units per month and 225 units in inventory at the start of the planning period. There is a $5 per unit charge for holding inventory at the end of each month and a limit of 600 units ending inventory for any period. What is the minimum cost production plan if the forecast must be met?
Month Forecast
January 250
February 200
March 300
April 400
May 500
A) $15,850
B) $16,150
C) $16,500
D) $16,800
Answer: C
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