Unformatted text preview: th for the other months.
The cost of holding inventory is $5 per unit per month, and no
backlogs are accepted (Demand must be satisfied in the period it
occurs; that is, no backordering is allowed.)
The inventory at the beginning of month 1 is 200 boxes, and the
required final inventory at the end of month 4 is 225 boxes. . Month 1 . . Month 2 . . Month 3 . . Month 4 . . Final
Inventory . . Excess . . Capacity Beginning
Inventory
Month 1 Reg Month 1 OT Month 2 Reg Month 2 OT Month 3 Reg Month 3 OT Month 4 Reg Month 4 OT
29
29 Demand . . . . Month 1 Beginning
Inventory
Month 1 . Month 2 . Month 3 0 5 . . Month 4 10 . . Final
Inventory . Excess 15 . . 20 200
0 Reg 50 55 60 16
0 OT 65 70 80 75 80 600
80 240 85 90 95 0 150
150 Month 2 Reg 50 55 60 65 800
0 800 Month 2 OT 75 80 85 90 60 Month 3 Reg 200
140 140
50 55 60 800
0 75 80 85 200
0 50 55 800 800 Month 3 OT
200 Month 4 Reg
700 Month 4 OT 100 100
75 80
125 Demand 360 0
560 . Capacity 200 360 Month 1 . 160 0
960 340 260 60
1140
0 0
700 125 75 200
75
30
30 0
225 0 365 3950 OPTIMALE SOLUTION FOR THE PRODUCTION LAN
• RT production:
– 600 boxes in the first month
– 800 boxes in each of the following months • OT production:
– 60 boxes in month 2
– 200 in month 3
– 125 in month 4 • Optimal cost:
– sum of the products of the quantities produced by the
unit costs (cost RT + cost OT)
– optimal cost = $152,100 + $29,800 = $181 900 EXAMPLE 5 : RELEVANT DATA
EXAMPLE 5 : RELEVANT DATA Demand for product A for the next four months is 255, 294, 321 and 301 units. The company has 30 employees who work an average of 20 days per month, 8 hours a day, at a rate of $20 per hour. However, due to a 1week LT in the production process, there are only 15 production days left in Month 1. It is possible to hire more, or to lay off some workers, and these decisions are implemented at the beginning of each month. Each unit requires 20 hours of labor, and overtime is limited to no more than 40 hours per employee per month (30 hours for Month 1) and costs $30 per hour. Initial inventory is 85 units and the company wishes to have a final inventory of 50 units at the end of the fourt...
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 Winter '14
 Capacity utilization, Sc

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