Based on Zangwill (1992). Murray Manufacturing runs a day shift and a night shift. Regardless of the number of units produced, the only production cost during a shift is a setup cost. It costs $8000 to run theday shift and $6000 to run the night shift. Demand for the next two days is as follows: day 1, 4000; night 1, 3000; day 2, 2000; night 2, 5000. It costs $1 per unit to hold a unit in inventory for a shift.a. Determine a production schedule that minimizes the sum of setup and inventory costs. All demand must be met on time. (Note: Not all shifts have to be run.)b. After listening to a seminar on the virtues of the Japanese theory of production, Murray has cut the setup cost of its day shift to $1000 per shift and the setup cost of its night shift to $3500 per shift. Nowdetermine a production schedule that minimizes the sum of setup and inventory costs. All demand must be met on time. Show that the decrease in setup costs has actually raised the average inventorylevel. Is this reasonable?
Based on Zangwill (1992). Murray Manufacturing runs a day shift and a night shift. Regardless of the number of units produced, the only production cost during a shift is a setup cost. It costs $8000 to run the
day shift and $6000 to run the night shift. Demand for the next two days is as follows: day 1, 4000; night 1, 3000; day 2, 2000; night 2, 5000. It costs $1 per unit to hold a unit in inventory for a shift.
a. Determine a production
b. After listening to a seminar on the virtues of the Japanese theory of production, Murray has cut the setup cost of its day shift to $1000 per shift and the setup cost of its night shift to $3500 per shift. Now
determine a production schedule that minimizes the sum of setup and inventory costs. All demand must be met on time. Show that the decrease in setup costs has actually raised the average inventory
level. Is this reasonable?
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