Robotic Pet Products Uses Overtime Inventory And Subcontracting To Absorb

Robotic Pet Products uses overtime, inventory and subcontracting to absorb fluctuations in demand. As expected, demand in the fourth quarter during the holiday season is particularly high, followed by first quarter demand for customers purchasing accessories for their R-pets. Given the demand and available capacities shown below, design a production plan that will satisfy demand at minimum cost.

Robotic Pet Products uses overtime, inventory and subcontracting

Regular production cost per unit ……$10
Overtime production cost per unit ……$15
Subcontracting cost per unit ………$20
Inventory holding cost per unit per period ..$3
Beginning inventory……….100

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