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Wormwood, Ltd., produces a variety of furniture products. The planning committee wants to prepare an aggregate plan for the next six months using the following information: MONTH 1 2 3 4 5 6 Demand 160 150 160 180 170 140 Capacity Regular 150 150 150 150 160 160 Overtime 10 10 0 10 10 10 Cost Per Unit Regular time $ 50 Overtime 75 Subcontract 80 Inventory, per period 4 Subcontracting can handle a maximum of 10 units per month. Beginning inventory is zero. Develop a plan that minimizes total cost. No back orders are allowed. Regular production and overtime production can be less than capacity in any month.

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Answer:

Wormwood limited

Production plan that will yield the least cost of $49,630 is shown in the attached document.

It entails maxing out the regular capacity from period 1 to 5, and using regular to produce only 140 units in period 6

It further entails using overtime to produce 10 units from period 1 to 5. And subcontracting only in period 4 to cover the demand/production gap.

This will keep inventory of 10 units in period 2, which is carried into period 3 and consumed in period 4.

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