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3. A company that produces a single product wants to determine its production, inventory holding and purchasing policies for the months of January, February and March. The firm has to meet the determined amount of demand every month. In order to meet this demand, it can produce itself or purchase that amount from another company. However, if production is to be made, either at least 100 units will be produced or not at all. In addition, due to technical capacities, maximum amounts that can be produced in a month is 400 units. In addition, the company has to pay 750$ of tax in the months it produces. The company can transfer the excess demand to the next month by bearing the inventory cost, but the company cannot stock more than 75 products due to the physical conditions in the warehouse. If the company wants to keep more units on inventory, they can rent a warehouse with a capacity of 125 products for 150$ per month. However, during this period, the company can rent this warehouse for a maximum

3. A company that produces a single product wants to determine its production, inventory holding and purchasing policies for the months of January, February and March. The firm has to meet the determined amount of demand every month. In order to meet this demand, it can produce itself or purchase that amount from another company. However, if production is to be made, either at least 100 units will be produced or not at all. In addition, due to technical capacities, maximum amounts that can be produced in a month is 400 units. In addition, the company has to pay 750$ of tax in the months it produces. The company can transfer the excess demand to the next month by bearing the inventory cost, but the company cannot stock more than 75 products due to the physical conditions in the warehouse. If the company wants to keep more units on inventory, they can rent a warehouse with a capacity of 125 products for 150$ per month. However, during this period, the company can rent this warehouse for a maximum

Practical Management Science
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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3. A company that produces a single product wants to determine its production, inventory holding and purchasing policies for the months of January, February and March. The firm has to meet the determined amount of demand every month. In order to meet this demand, it can produce itself or purchase that amount from another company. However, if production is to be made, either at least 100 units will be produced or not at all. In addition, due to technical capacities, maximum amounts that can be produced in a month is 400 units. In addition, the company has to pay 750$ of tax in the months it produces. The company can transfer the excess demand to the next month by bearing the inventory cost, but the company cannot stock more than 75 products due to the physical conditions in the warehouse. If the company wants to keep more units on inventory, they can rent a warehouse with a capacity of 125 products for 150$ per month. However, during this period, the company can rent this warehouse for a maximum of 2 months. The company does not have a demand at the beginning of production, but at the end of the period, it is requested to have at least 35 units. The data related to the problem are given in the table. Propose the mathematical model that will enable the firm to meet the demand with minimum cost during this period. (40p) January February March Demand 250 325 200 Production Cost 5 6 4 Holding Inventory Cost 1 1,5 0,8 Outsourcing Cost 6 6 5
Transcribed Image Text:3. A company that produces a single product wants to determine its production, inventory holding and purchasing policies for the months of January, February and March. The firm has to meet the determined amount of demand every month. In order to meet this demand, it can produce itself or purchase that amount from another company. However, if production is to be made, either at least 100 units will be produced or not at all. In addition, due to technical capacities, maximum amounts that can be produced in a month is 400 units. In addition, the company has to pay 750$ of tax in the months it produces. The company can transfer the excess demand to the next month by bearing the inventory cost, but the company cannot stock more than 75 products due to the physical conditions in the warehouse. If the company wants to keep more units on inventory, they can rent a warehouse with a capacity of 125 products for 150$ per month. However, during this period, the company can rent this warehouse for a maximum of 2 months. The company does not have a demand at the beginning of production, but at the end of the period, it is requested to have at least 35 units. The data related to the problem are given in the table. Propose the mathematical model that will enable the firm to meet the demand with minimum cost during this period. (40p) January February March Demand 250 325 200 Production Cost 5 6 4 Holding Inventory Cost 1 1,5 0,8 Outsourcing Cost 6 6 5
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