DO NOT COPY FROM PREVIOUS SOLUTION

The Boring Company has signed a contract to supply its hugely successful not a flamethrower flamethrower to two customers A and B for the next 3 months. The requirements for each customer are given in the following Table.

Customer September October November

A 30 20 20

B 25 20 10

The Boring Company can produce 40 flamethrowers per month at a cost of $200 per unit on regular time and an additional 10 flamethrowers per month on overtime at a cost of $240 per unit. They can store units at a cost of $20 per unit per month. The contract allows the Boring Company to fall short of its supply commitment to customer A in September and October but this incurs a penalty cost of $10 per unit per month and they are only willing to wait one month at most for the delivery of the flamethrower units. No shortages are allowed for customer B and their demands must be satisfied on the months specified. The Boring Company wishes to determine the optimal production schedule that will minimize the total cost of production, storage and shortages.

(a) Determine the optimal production schedule that will minimize the total cost of production, storage and shortages.

(Suggestion: Start by defining the supply and demand points and forming a cost table. Fill in the cost table completely by assigning a very high cost to any demand that cannot be met from a supply point.) Use Vogels Method to find your initial feasible solution. 10 Marks

(b) The Boring Company has just found out that there will be no overtime available in (10 marks) September due to labor shortages. How should the Boring Company alter their production plan to accommodate this change?