What should be the production and outsource plan

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Reference no: EM131242024

A gear manufacturer is planning next week's production run for four types of gears. If necessary, it is possible to outsource any type of gear from another gear company located nearby. The following table and the table at the bottom of this page show next week's demand, revenue per unit, outsource cost per unit, time (in hours) required per unit in each production process, and the availability and costs of these processes. The nearby company can supply a maximum of 300 units of each type of gear next week. What should be the production and/or outsource plan for the next week to maximize profit?

Gear Type Gear A Gear B Gear C Gear D

Demand 400 500 450 600

Revenue $12.50 $15.60 $17.40 $19.30

Outsource $7.10 $8.10 $8.40 $9.00
.
Table for Problem 3-8

Process Gear A Gear B Gear C Gear D Hours Available Cost per Hour

Forming 0.30 0.36 0.38 0.45 500 $9.00

Hardening 0.20 0.30 0.24 0.33 300 $8.00

Deburring 0.30 0.30 0.35 0.25 310 $7.50

Reference no: EM131242024

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