4. The demand for ice cream during the three summer months (June, July, and August) at All-Flavors Parlor is estimated at 500, 600, and 400 20-gallon cartons, respectively. Two wholesalers, 1 and 2, supply All-Flavors with its ice cream. Although the flavors from the two suppliers are different, they are interchangeable. The maximum number of cartons either supplier can provide is 400 per month. Also, the prices the two suppliers charge change from one month to the next according to the following schedule:

To take advantage of price fluctuation, All-Flavors can purchase more than is needed for a month and store the surplus to satisfy the demand in a later month. The cost of refriger- ating an ice cream carton is $5 per month. It is realistic in the present situation to assume that the refrigeration cost is a function of the average number of cartons on hand during the month. Develop an optimum schedule for buying ice cream from the two suppliers.

Answer rating: 100% (QA)

Let us assume the parlor purchases x 1 x 2 x 5 cartons from supplier 1 on June July and August respe... View the full answer