Bammo Inventory Homework Solution
STOR 112
40 points written work + 30 points computer work
1. Recall the data for the Bammo inventory problem:
Period
Capacity
Demand
Unit production cost
1
6000
2000
11
2
6000
8000
15
3
4000
4000
15
The initial inventory at the beginning of period 1 is 150 units. The minimum inventory to
be allowed at the end of each period is 100 units (to prepare for a possible sudden surge in
demand). The cost of storing a unit
•
from period 1 to period 2 is 4.5 cents;
•
from period 2 to period 3 is 3 cents;
•
after period 3 is 3 cents.
Note that even after period 3, we must have at least 100 units left, and each of these units
will also incur 3 cents cost. Demand in each period must be satisﬁed exactly.
(5 points) Solve the Bammo problem in Excel. To check your work: in a correct solution, the
total cost is $2035. Interpret your solution from Excel.
Solution.
the LP is
min 0
.
11
X
1 + 0
.
15
X
2 + 0
.
15
X
3 + 0
.
045
I
1 + 0
.
03
I
2 + 0
.
03
I
3
s.t. X
1

I
1 = 1850
X
2 +
I
1

I
2 = 8000
X
3 +
I
2

I
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 Fall '06
 RUBIN,David
 Noble gas, $1983, $2035, $2058.82

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