Question: A company produces two products. The relevant data is shown below: Product 1 Suppose that Demand rate (units/year) Production rate (units/year) Production cost ($/unit)

A company produces two products. The relevant data is shown below: Product

A company produces two products. The relevant data is shown below: Product 1 Suppose that Demand rate (units/year) Production rate (units/year) Production cost ($/unit) Inventory carrying rate (%/unit/year) 2,000 4,000 20 25 Product 2 12,000 16,000 15 25 the setup cost for each product is same and $400. the total number of setups used for producing Product 1 and Product 2 is limited by 5. Using Lagrange multiplier technique, determine the optimum order quantity for each product and the minimum total cost.

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To solve this problem using the Lagrange multiplier technique we need to define the following Total production cost for each product This is given by ... View full answer

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