A company that produces chairs has obtained a demand forecast for the next three months. To meet
Question:
A company that produces chairs has obtained a demand forecast for the next three months. To meet the demand, the company can produce chairs using regular production time, overtime, and using a subcontractor. The demand and projected capacities for three production options are in the following table:
Month 1 | Month 2 | Month 3 | |
demand (units) | 25000 | 35000 | 45000 |
regular capacity | 35000 | 30000 | 20000 |
overtime capacity | 5000 | 5000 | 5000 |
subcontractor capacity | 7500 | 2500 | 3500 |
The company can produce chairs at a cost of $50/unit in regular time and $70/unit using overtime. The subcontractor charges $90/unit to produce chairs. Placing chairs in storage for future use costs the company $20/unit per month.
(a) Construct a network representation of the production problem.
(b) Is the company capable of meeting the demand requirements?
(c) Convert the problem into a linear program.
(d) Find the minimum cost to meet the demand requirements. What will be the cost to produce the chairs?
Business Statistics
ISBN: 978-0321925831
3rd edition
Authors: Norean Sharpe, Richard Veaux, Paul Velleman