Problem1 Acme Manufacturing Acme Manufacturing makes a variety of household appliances at a single manufacturing facility. The expected demand for one of these appliances during the next 4 months is shown in the following table along with the expected production costs and the expected Month Demand Production Cost Production Capacity 1 420 $49.00 500 2 580 $45.00 520 3 310 $46.00 450 4 540 $47.00 550 capacity for producing these items. Acme estimates it costs $1.50 per month for each unit of this appliance carried in inventory (estimated by averaging the beginning and ending inventory levels each month). Currently, Acme has 120 units in inventory on hand for this product. To maintain a level workforce, the company wants to produce at least 400 units per month. The company also wants to maintain a safety stock of at least 50 units per month. Acme wants to determine how many of each appliance to manufacture during each of the next 4 months to meet the expected demand at the lowest possible total cost. Questions: a) Formulate an LP model for this problem. b) Create a spreadsheet model for this problem and solve it using Solver. c) What is the optimal solution? d) How much money could Acme save if they were willing to drop the restriction about producing at least 400 units per month?
Problem1 Acme Manufacturing Acme Manufacturing makes a variety of household appliances at a single manufacturing facility. The expected demand for one of these appliances during the next 4 months is shown in the following table along with the expected production costs and the expected Month Demand Production Cost Production Capacity 1 420 $49.00 500 2 580 $45.00 520 3 310 $46.00 450 4 540 $47.00 550 capacity for producing these items. Acme estimates it costs $1.50 per month for each unit of this appliance carried in inventory (estimated by averaging the beginning and ending inventory levels each month). Currently, Acme has 120 units in inventory on hand for this product. To maintain a level workforce, the company wants to produce at least 400 units per month. The company also wants to maintain a safety stock of at least 50 units per month. Acme wants to determine how many of each appliance to manufacture during each of the next 4 months to meet the expected demand at the lowest possible total cost. Questions: a) Formulate an LP model for this problem. b) Create a spreadsheet model for this problem and solve it using Solver. c) What is the optimal solution? d) How much money could Acme save if they were willing to drop the restriction about producing at least 400 units per month?
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:**Problem 1: Acme Manufacturing**
Acme Manufacturing makes a variety of household appliances at a single manufacturing facility. The expected demand for one of these appliances during the next 4 months is shown in the following table along with the expected production costs and the expected capacity for producing these items.
| Month | 1 | 2 | 3 | 4 |
|--------------|-------|-------|-------|-------|
| Demand | 420 | 580 | 310 | 540 |
| Production Cost | $49.00 | $45.00 | $46.00 | $47.00 |
| Production Capacity | 500 | 520 | 450 | 550 |
Acme estimates it costs $1.50 per month for each unit of this appliance carried in inventory (estimated by averaging the beginning and ending inventory levels each month). Currently, Acme has 120 units in inventory on hand for this product. To maintain a level workforce, the company wants to produce at least 400 units per month. The company also wants to maintain a safety stock of at least 50 units per month. Acme wants to determine how many of each appliance to manufacture during each of the next 4 months to meet the expected demand at the lowest possible total cost.
**Questions:**
a) Formulate an LP model for this problem.
b) Create a spreadsheet model for this problem and solve it using Solver.
c) What is the optimal solution?
d) How much money could Acme save if they were willing to drop the restriction about producing at least 400 units per month?
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