Reference no: EM132196262

Excit_ATV A company that makes ATVs is planning production of its popular mountain bike for the next six months. The company estimates that they will need both regular and overtime to fulfil the order. However, there are limits on how much regular and overtime is available in a given month. Below, you will see Table 1, which outlines the maximum regular time, and maximum overtime that is allowed in a given month. In addition, you will also find the demand that the company needs to fulfil. Table 1: Production and Demand Table May June July August September October Maximum Regular Time Production 155 155 155 155 155 155 Maximum Over Time Production 90 90 90 90 90 90 Demand 157 175 183 143 163 176 The cost associated with manufacturing an ATV is dependent upon whether the units were made in regular or overtime and the month in which they are produced. A summary of the costs is shown in Table 2. Table 2: Cost Table May June July August September October Regular Time Production Cost per Unit $120.00 $120.00 $120.00 $120.00 $120.00 $120.00 Over Time Production Cost per Unit $142.00 $142.00 $142.00 $142.00 $142.00 $142.00 Table 3 specifies the starting inventory, the minimum safety stock (i.e. minimum ending inventory), and the inventory hold cost per unit. Table 3: Inventory Table Starting Inventory (May) 65 Minimum Safety Stock 25 Inventory Holding Cost per Unit $18 Develop a model to determine the number of units to be produced on regular time and overtime to minimize total cost during the six-month horizon. Comments and Hints • Monthly Holding Cost is the inventory holding cost per unit times the average inventory for each month.