A company produces a niche hunting blind. Because of the nature of this product, demand varies greatly by season. In fact, demand exceeds production capacity during hunting season (fall,) but is very low in the summer months. To meet the high demand during the fall, the company produces the blind year round, producing more than what is needed in the summer in order to carry over inventory into the peak season. Their production facility can produce at most 60 blinds per month using regular labor at a cost of $125 each. Up to 15 additional blinds can be produced by utilizing overtime labor at a cost of $135 each. The blinds are sold for $225. Because of storage cost and the opportunity cost of capital, each blind held in inventory from one month to the next incurs a cost of $15 per blind. Since demand is uncertain, the company would like to maintain an ending inventory of at least 5 blinds during the warm months (May-September) and at least 15 blinds during the other months (October-April). It is now the start of January and the company has 5 blinds in inventory. The forecast of demand over the next 12 months is shown in the following table. Formulate and solve a linear programming model in a spreadsheet to determine how many blinds should be produced each month to maximize total profit. Jan. Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec. 65 30 25 30 45 10 25 40 95 90 90 LO
A company produces a niche hunting blind. Because of the nature of this product, demand varies greatly by season. In fact, demand exceeds production capacity during hunting season (fall,) but is very low in the summer months. To meet the high demand during the fall, the company produces the blind year round, producing more than what is needed in the summer in order to carry over inventory into the peak season. Their production facility can produce at most 60 blinds per month using regular labor at a cost of $125 each. Up to 15 additional blinds can be produced by utilizing overtime labor at a cost of $135 each. The blinds are sold for $225. Because of storage cost and the opportunity cost of capital, each blind held in inventory from one month to the next incurs a cost of $15 per blind. Since demand is uncertain, the company would like to maintain an ending inventory of at least 5 blinds during the warm months (May-September) and at least 15 blinds during the other months (October-April). It is now the start of January and the company has 5 blinds in inventory. The forecast of demand over the next 12 months is shown in the following table. Formulate and solve a linear programming model in a spreadsheet to determine how many blinds should be produced each month to maximize total profit. Jan. Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec. 65 30 25 30 45 10 25 40 95 90 90 LO
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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Transcribed Image Text:A company produces a niche hunting blind. Because of the nature of this product, demand varies greatly by season. In fact, demand exceeds
production capacity during hunting season (fall.) but is very low in the summer months. To meet the high demand during the fall, the company
produces the blind year round, producing more than what is needed in the summer in order to carry over inventory into the peak season.
Their production facility can produce at most 60 blinds per month using regular labor at a cost of $125 each. Up to 15 additional blinds can be
produced by utilizing overtime labor at a cost of $135 each. The blinds are sold for $225. Because of storage cost and the opportunity cost of
capital, each blind held in inventory from one month to the next incurs a cost of $15 per blind. Since demand is uncertain, the company would
like to maintain an ending inventory of at least 5 blinds during the warm months (May-September) and at least 15 blinds during the other
months (October-April). It is now the start of January and the company has 5 blinds in inventory. The forecast of demand over the next 12
months is shown in the following table. Formulate and solve a linear programming model in a spreadsheet to determine how many blinds
should be produced each month to maximize total profit.
Jan.
Feb.
Mar.
Apr.
May
June
July
Aug.
Sept.
Oct.
Nov.
Dec.
65
30
25
30
45
10
25
40
95
90
90
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