Each year, Paynothing Shoes faces demands (whichmust be met on time) for pairs of shoes as shown in Table37. Workers work three consecutive quarters and then receiveone quarter off. For example, a worker may work duringquarters 3 and 4 of one year and quarter 1 of the next year.During a quarter in which a worker works, he or she canproduce up to 50 pairs of shoes. Each worker is paid $500per quarter. At the end of each quarter, a holding cost of $50per pair of shoes is assessed. Formulate an LP that can beused to minimize the cost per year (labor holding) ofmeeting the demands for shoes. To simplify matters, assume3.11 Multiperiod Financial Models 105that at the end of each year, the ending inventory is zero.(Hint: It is allowable to assume that a given worker will getthe same quarter off during each year.) TAB LE 37Quarter 1 Quarter 2 Quarter 3 Quarter 4600 300 800 100
Each year, Paynothing Shoes faces demands (which
must be met on time) for pairs of shoes as shown in Table
37. Workers work three consecutive quarters and then receive
one quarter off. For example, a worker may work during
quarters 3 and 4 of one year and quarter 1 of the next year.
During a quarter in which a worker works, he or she can
produce up to 50 pairs of shoes. Each worker is paid $500
per quarter. At the end of each quarter, a holding cost of $50
per pair of shoes is assessed. Formulate an LP that can be
used to minimize the cost per year (labor holding) of
meeting the demands for shoes. To simplify matters, assume
3.11 Multiperiod Financial Models 105
that at the end of each year, the ending inventory is zero.
(Hint: It is allowable to assume that a given worker will get
the same quarter off during each year.)
TAB LE 37
Quarter 1 Quarter 2 Quarter 3 Quarter 4
600 300 800 100
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