Multiperiod%20production%20planning

Multiperiod%20production%20planning - 500 units of the...

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IEOR 162 NOTES SPRING 2007 1. Multi-period Production Planning Suppose in a factory, the managers hired you as a consultant to help them to decide the production plan for the next 7 months. The monthly demand forecasts for the next 7 months are known as listed in Table 1. Except for the regular hours, managers can ask workers to work overtime with higher pay rate. The pay rates are fluctuating over these months, for both regular rate and overtime rate. The related data are listed in Table 1. Month Demand (units) Regular rate ($/unit) Overtime rate ($/unit) 1 1 , 300 100 105 2 1 , 400 105 110 3 1 , 000 110 120 4 800 90 100 5 1 , 700 100 110 6 1 , 900 105 130 7 2 , 500 110 130 Table 1 If the workers only work on regular hours, they can produce at most 1
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Unformatted text preview: , 500 units of the products per month. Since we can always hire more workers at the overtime rate, they can produce any amount of products at the overtime rate. If there are products not sold out in a month, they can be kept as inventory at $4/unit. But the factory can keep at most 250 units of inventory per month because of the limited space. Now, they have 100 units products as inventory. And they want to keep the same inventory level at the end of the 7th month. How can you help them to determine a production plan that meets the monthly demands at a minimal production and inventory cost? 1...
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