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I do NOT need a textbook definition of NLP. I need help setting up this problem

ID: 438500 • Letter: I

Question

I do NOT need a textbook definition of NLP. I need help setting up this problem to solve this NLP problem.

The Radford hardware store expects to sell 1,500 electric garbage disposal units in the coming year. Demand for this product is fairly stable over the year. It costs $20 to place an oder for these units, and the company assumes a 20% annual holding cost on inventory. The following price structure applies to Radford's purchases of this product:
Order Quantity
0-499 500-999 1,000+
Price per unit $35 $33 $31
So, if Radford orders 135 units, it pays $35 per unit; if 650, it pays $33 per unit; and if 1,200, it pays $31 per unit.
a. what is the most economical order quantity and total cost of this solution? (Hint: Solve a separate EQQ problem for each of the order quantity ranges given, and select the solution that yields the lowest total cost.) Use Solver
b. Suppose the discount policy changed so that Radford had to pay $35 for the first 499 units ordered, $33 for the next 500 units ordered, and $31 for any additional units. What is the most economical order quantity, and what is the total cost of this solution? Use Solver.

Explanation / Answer

In mathematics, nonlinear programming (NLP) is the process of solving a system of equalities and inequalities, collectively termed constraints, over a set of unknown real variables, along with an objective function to be maximized or minimized, where some of the constraints or the objective function are nonlinear.

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