A company needs to schedule the monthly production of a certain item for the next 4 months. The unit production cost is estimated to be $12 for the first 2 months and $14 for the last two months. The monthly demands are 750, 1000, 850 and 950 units. The company can increase the monthly production during the second and third months by utilizing overtime. The increase in production by this measure is limited to 400 units per month, and costs an extra $4 per unit. The regular production capacity is 1000 units/month. Excess production can be stored at a cost of $3 per unit per month, but a maximum of 50 units can be stored in any month. Assuming that the beginning and ending inventory levels are zero, formulate this problems as an LP model so that the total cost s minimized.
A company needs to
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