an inventory problem with the following demands: Month 1-3 Units Month 2-4 Units
ID: 368062 • Letter: A
Question
an inventory problem with the following demands: Month 1-3 Units Month 2-4 Units Month 3-5 Units Setup cost to produce items in demand is $7. The per unit cost is 3. The beginning of month 1 is 1 and at the end of month 3 we want to period. Assume a production capacity of 6 and programming model discussed in class. Show all work for credit. S3 in Months 1 and 2 and S4 in Month inventory and holding cost is $2 for Months 1 and 2 and $3 for Month 3. The inventory at the have no units in inventory for the next a storage capacity of 3. Solve using the dynamie k- 'month 1,2 h=2 lr 3,4 h=3 2Explanation / Answer
Not sure about the method discussed in the class.
Choice for the first month: Produce quantity (subject to capacity) to meet demand for all three months or Produce (subject to capacity) to meet demand for first two months or Produce just to meet demand of 1st month.
Similarly choices for second and third month can be evaluated as follows:
The given data is summarized as follows:
In all three months we require 13 units with beginning inventory of 1 unit and zero inventory at the end of month 3.
Therefore, number of units to be produced is 12 that requires minimum two setups of 6 units each.
Now the options for month3:
Produce 6 units with setup cost $7 plus Production cost $24 (6*4), Total $31
Produce in earlier months and carry to month 3 but store capacity is restricted to 3 units, therefore production of minimum 3 units must be in month 3. This option increases total cost because of higher setups and holding costs.
Now problem reduced to meeting demand for first two months. In order to meet demand of month1 we must have a setup in month1 and produce at least (3-1) (Demand-inventory) with maximum 5 because producing 6 units means storing 4 units (1+6-3) which is not feasible.
Holding inventory means adding cost, therefore best choice is to produce 2 units in month1 and produce 4 units in month 2.
Answer:
Produce 2 units in month1 with setup cost $7 and production cost $6 (2*3)
Produce 4 units in month2 with setup cost $7 and production cost $12 (4*3)
Produce 6 units in month3 with setup cost $7 and production cost $24 (6*4)
Note: Minimum Three setups are required because of store capacity
Month 1 Month2 Month3 Total Demand 3 4 6 13 Setup Cost 7 7 7 Unit cost 3 3 4 Inv.Cost 2 2 3 Begin-Inv. 1 End-Inv. Prod.Capacity 6 Store-Capacity 3Related Questions
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