The maintenance division of Speedy Taxi Company needs the following quantities o

Question

The maintenance division of Speedy Taxi Company needs the following quantities of automobile generators for the next three months :month 1: generator requirement:100; month 2:150 ;month 3: 200 . It can purchase a new generator for P400 or have a used generator rebuilt by an outside firm for P250. In the latter case the outside firm picks up the used generators at the beginning of the month and returns the rebuilt generators at the beginning of the following month. The taxi company has 120 used generators in stock, but the used generators will not have any salvage value at the end of three months. If possible, the company wants to avoid storing any used generators. How can the taxi company minimize the total cost of meeting the generator requirements for the three-month period?

Explanation / Answer

For the First month the taxi company can purchase 100 new generators. In the beginning of the first month itself, since the company has120 used generators, they can give it to the outside firm for rebuilding the same. By the beginning of the next month they can be used for the company.

For the second month, the 120 rebuilt generators and the 30 new generators can be put to use, for the total requirement of 150 generators.

For the third month requriement of 200 generators, 120 rebuilt generators and the 80 new generators can be used to satify the requirement

With sparsely run new generators they can also be sold at a good value after the 3 month usage. Since the rebuilt generators has no value. they could be scrapped

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