MIE376 Lec 12 DP.page08 - that there is a holding cost of...

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MIE 376 Mathematical Programming 8 Application to an Inventory Problem (See Winston section 18.3) ± An electric power transformer manufacturer predicts its demand over the next four months to be 1, 3, 2 and 4 transformer units respectively. It currently has no units in inventory. In order to meet the demand it has to decide whether to produce all the units at once, just the number of units required in each month, or somewhere in between. What makes the problem challenging is
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Unformatted text preview: that there is a holding cost of .5 M$ for every transformer in inventory at the end of the month, but there is also a 3M$ setup cost for every month in which a unit is produced. It costs 1M$ to manufacture one transformer. There is enough storage space to hold up to 4 units, and sufficient production capacity to produce up to 5 units. What is the optimal production schedule?...
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This note was uploaded on 07/10/2011 for the course MIE 376 taught by Professor Daniel during the Spring '11 term at University of Toronto- Toronto.

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