A company produces a product at two plants, 1 and 2. The unit production cost and production capacity during each period are: Unit production cost $capacityPlant 1 (period 1)337Plant 1 (period 2)434Plant2 (period 1)309Plant 2 (period 2)419The product is instantaneously shipped to the company's only customer according to the unit shipping costs below: Period 1Period 2Plant 1 to customer$51$60Plant 2 to customer$42$71If a unit is produced and shipped during period 1, it can still be used to meet a period 2 demand, but a holding cost of $13 per unit in inventory is assessed. At the end of period 1, at most six units may be held in inventory. Demands are as follows: period 1, 9; period 2, 11. Formulate an MCNFP that can be use to minimize the cost of meeting all demands on time. Draw the network and determine the net outflow at each node, the arc capacities and shipping costs.

Given information, Production Cost Unit Capacity Plant 1(period 1) 33 7 Plant 1(period 2)…

Answered: A company produces a product at two…

Understanding Business

12th Edition

ISBN:9781259929434

Author:William Nickels

Publisher:William Nickels

Chapter1: Taking Risks And Making Profits Within The Dynamic Business Environment

Section: Chapter Questions

Problem 1CE

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A company produces a product at two plants, 1 and 2. The unit production cost and production capacity during each period are:

	Unit production cost $	capacity
Plant 1 (period 1)	33	7
Plant 1 (period 2)	43	4
Plant2 (period 1)	30	9
Plant 2 (period 2)	41	9

The product is instantaneously shipped to the company's only customer according to the unit shipping costs below:

	Period 1	Period 2
Plant 1 to customer	$51	$60
Plant 2 to customer	$42	$71

If a unit is produced and shipped during period 1, it can still be used to meet a period 2 demand, but a holding cost of $13 per unit in inventory is assessed. At the end of period 1, at most six units may be held in inventory. Demands are as follows: period 1, 9; period 2, 11. Formulate an MCNFP that can be use to minimize the cost of meeting all demands on time. Draw the network and determine the net outflow at each node, the arc capacities and shipping costs.

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