College Press publishes textbooks for the college market. The demand for college textbooks is high during the begin- ning of each semester and then tapers off during the semes- ter. The unavailability of books can cause a professor to switch adoptions, but the cost of storing books and their rapid obsolescence must also be considered. Given the de- mand and cost factors shown here, use the transportation method to design an aggregate production plan for College Press that will economically meet demand. What is the cost of the production plan? Regular capacity per quarter 10,000 booksOvertime capacity per quarter 5,000 booksSubcontracting capacity per qtr 10,000 booksRegular production rate $20 per bookOvertime wage rate $30 per bookSubcontracting cost $35 per bookHolding cost $2.00 per book Months Demand ForecastFebruary–April 5,000May–July 10,000August–October 30,000November–January 25,000
College Press publishes textbooks for the college market. The demand for college textbooks is high during the begin- ning of each semester and then tapers off during the semes- ter. The unavailability of books can cause a professor to switch adoptions, but the cost of storing books and their rapid obsolescence must also be considered. Given the de- mand and cost factors shown here, use the transportation method to design an aggregate production plan for College Press that will economically meet demand. What is the cost of the production plan?
Regular capacity per quarter 10,000 books
Overtime capacity per quarter 5,000 books
Subcontracting capacity per qtr 10,000 books
Regular production rate $20 per book
Overtime wage rate $30 per book
Subcontracting cost $35 per book
Holding cost $2.00 per book
Months Demand Forecast
February–April 5,000
May–July 10,000
August–October 30,000
November–January 25,000
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