Capacity 200 360 month 1 160 0 960 340 260 60 1140 0

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

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 O-T Month 2 Reg Month 2 O-T Month 3 Reg Month 3 O-T Month 4 Reg Month 4 O-T 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 O-T 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 O-T 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 O-T 200 Month 4 Reg 700 Month 4 O-T 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...
View Full Document

This document was uploaded on 02/10/2014.

Ask a homework question - tutors are online