20. As discussed previously, the capacity of the production operation is determined primarily by the total labor hours worked.
21. Therefore, machine capacity does not limit the capacity of the production operation.
22. Because of labor rules, no employee works more than 10 hours of overtime per month.
23. Currently, CP has no limits on subcontracting, inventories, and stock-outs/backlog.
24. All stockouts are backlogged and supplied from the following months' production.
25. Inventory costs are incurred on the ending inventory in the month.
26. The various costs are shown in Table 2.