Answered: During the next five periods, the…

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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Question

During the next five periods, the demands listed in the excel template file must be met on time. At the beginning of period 1, the inventory level is 1000. During each period when production occurs, a setup cost of $10,000 and a per-unit production cost of $45 are incurred. At the end of each period, a per-unit holding cost of $5 is incurred. Determine the cost-minimizing production schedule. Assume that there is no capacity limit for this production line.

I have the template set up below jsut not sure how to solve the problem.

Production schedule

Monetary inputs
Setup cost	$10,000
Variable cost	$45
Holding cost	$5

Beginning inventory	1000

	Month 1	Month 2	Month 3	Month 4	Month 5
Demand	2000	1700	3000	2000	3400

	Month 1	Month 2	Month 3	Month 4	Month 5
Produce this month

	Month 1	Month 2	Month 3	Month 4	Month 5
Production level
	<=	<=	<=	<=	<=
Effective capacity

Ending inventory
	>=	>=	>=	>=	>=
Meet demand on time

Total setup cost	$10,000
Total variable cost	$45
Total holding cost	$5
Total cost	$10,050