A firm manufactures bicycle wheels. Given the following costs and quarterly sales forecasts, use the transportation method to design a…
A firm manufactures bicycle wheels. Given the following costs and quarterly sales forecasts, use the transportation method to design a production plan that will economically meet demand. What is the cost of the plan?
Quarter 1: Sales Forecast 50,000
Quarter 2: Sales Forecast 150,000
Quarter 3: Sales Forecast 200,000
Quarter 4, Sales Forecast 52,000
Inventory carrying cost: $3 per pair of wheels per quarter
Production per employee: 1,000 pairs of wheels per quarter
Regular workforce: 50 workers
Overtime capacity: 50,000 pairs of wheels
Subcontracting capacity: 40,000 pairs of wheels
Cost of regular production: $50 per pair of wheels
Cost of overtime production: $75 per pair of wheels
Cost of subcontracting: $85 per pair of wheels
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