University of Windsor
Odette School of Business
Operations Management I 73-331 Summer 2006
Maximum Points 60
Thursday, July 20, in the beginning of the class.
Staple your assignment with a cover sheet that includes your name and
student ID on the front page of the assignment. Show work. To get the maximum point,
show all formula in an appropriate step-by-step procedure, substitution, intermediate
results, final answers, conclusions and interpretations. Most marks are allocated to
procedure, formula and substitution. So, the final answers do not complete the work. In
some exceptional cases, if the same formula is used several times, you may avoid
repetition by showing some sample formula and substitution. Show your results up to
four decimal places. This is an individual assignment. You may discuss the problems with
other students, but you must hand in your own work, in your own words. Late
assignments may not be accepted. This assignment covers lessons 10-12, 14-17.
(10 points, lesson 10): Harold Gray owns a small farm in the Salinas Valley that
grows apricots. The apricots are dried on the premises and sold to a number of large
supermarket chains. Based on past experience and committed contracts, he estimates
that sales over the next five years in thousands of packages will be as follows:
Forecasted Demand (thousands of packages)
Assume that (i) workers may be hired/fired in the beginning of a year (ii) each worker
stays on job for at least one year and (iii) there are currently 6 workers on the payroll.
Gray will have 100,000 packages on hand at the end of the current year. He would
like to meet all the demand and have at least 50,000 packages of inventory at the end
of the 5
year. Assume that, on the average, each worker is paid $50,000 per year and
is responsible for producing 40,000 packages. Inventory costs have been estimated to
be 10 cents per package per year. Based on the effort of interviewing and training new
workers, Farmer Grey estimates that it costs $500 for each worker hired. Severance
pay amounts to $1,000 per worker. Find a production plan that minimizes total cost.
Formulate a linear programming problem and solve the problem using Excel solver. A