As a manager of a washing machine manufacturing company you are
required to determine the level of output per month from your plant for the
next quarter. At the end of September (last quarter) you had 100 finished
washing machines in stock. Your company works with 20 small suppliers on a fee
for service of $1600 per month. On an average each supplier can provide
material for 10 washing machines per month.If you decide not to use all 20 suppliers average cost of not buying
from a supplier is $400 per supplier as the supplier has to be compensated for
lost business. If you decide to get new suppliers the cost of contracting and
training a new supplier is $300 per supplier.Your major customer has projected a requirement of 200 washing machines
in October. In November the customer projects a demand of 300 washing machines
and 200 again for December.