The Mega-Bucks Corporation is planning its production schedule for the next four weeks and is forecasting the following demand for compound X - a key raw material used in its production process:   Forecasted Demand of Compound X Week 1 2 3 4 Demand 400 lbs. 150 lbs. 200 lbs. 350 lbs. The company currently has no compound X on hand. The supplier of this product delivers only in batch sizes that are multiples of 100 pounds (0, 100, 200, 300, and so on). The price of this material is $125 per 100 pounds. Deliveries can be arranged weekly, but there is a delivery charge of $50. Mega-Bucks estimate that it costs $0.15 for each pound of compound X held in inventory from one week to the next. Assuming Mega-Bucks does not want more than 50 pounds of compound X in inventory at the end of week 4, how much should it order each week so that the demand for this product will be met in the least costly manner? a) Formulate an ILP model for this problem. Please list down ALL constraints. b) Create a spreadsheet model for this problem and solve it using Solver. c) What is the optimal solution?

Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
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The Mega-Bucks Corporation is planning its production schedule for the next four weeks and is forecasting the following demand for compound X - a key raw material used in its production process:

 

Forecasted Demand of Compound X

Week

1

2

3

4

Demand

400 lbs.

150 lbs.

200 lbs.

350 lbs.

The company currently has no compound X on hand. The supplier of this product delivers only in batch sizes that are multiples of 100 pounds (0, 100, 200, 300, and so on). The price of this material is $125 per 100 pounds. Deliveries can be arranged weekly, but there is a delivery charge of $50. Mega-Bucks estimate that it costs $0.15 for each pound of compound X held in inventory from one week to the next. Assuming Mega-Bucks does not want more than 50 pounds of compound X in inventory at the end of week 4, how much should it order each week so that the demand for this product will be met in the least costly manner?

a) Formulate an ILP model for this problem. Please list down ALL constraints.

b) Create a spreadsheet model for this problem and solve it using Solver.

c) What is the optimal solution?

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