CLM owns a company to manufacture parts for the aerospace industry. The producti
ID: 1941191 • Letter: C
Question
CLM owns a company to manufacture parts for the aerospace industry. The production capacity for the next four months is given as follows:Production Capacity in Units
Month Regular Production Overtime Production
January 3,000 500
February 2,000 400
March 3,000 600
April 3,500 800
The regular cost of production from January to April is $500, $520, $450, $400 per unit respectively and the cost of overtime production is $150 per unit in addition to the regular cost of production. The company can utilize inventories to reduce fluctuations in production, but carrying one unit of inventory costs the company $40 per unit per month. Currently there are no units in inventory. However, the company wants to maintain a minimum safety stock of 100 units of inventory during the months of January, February, and March. The estimated demand for the next four months is as follows:
Month January February March April
Demand 2,800 3,000 3,500 3,000
Formulate a LP problem to decide the best production plan in these four months.
Explanation / Answer
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