The SONOCO company orders two types of resin. The high-density resin type 1, which has a cost
Question:
The SONOCO company orders two types of resin. The high-density resin “type 1”, which has a cost of$32 per kg and an annual demand of 200,000kg; Your ordering cost is $8,000. low density resin“Type 2” costs $37 per kg, has an annual demand of 300,000kg, and has an ordering cost of $8,000.The cost of maintaining inventories of product 1 is 15% per semester and 30% per semester of product 2.production requirements, minimum orders of 1,000 kg of type 1 product must be made. In addition, it isrequired a minimum shipment of 100 orders per year considering the sum of both products.
For moisture absorption specifications, the average inventory must be less than 700 kgconsidering the sum of both products, and the minimum order for material 2 is 800 kg. Suppose thattwoonly product 2 allows stockouts, and its stockout cost is $0.20 per unit-year and the loss of goodwill is $0.1 per unit.
a) Formulate the problem as a mathematical programming model (objective function and constraints) thatminimize the total annual cost. No solution required, only formulation.
Managing Supply Chain and Operations An Integrative Approach
ISBN: 978-0132832403
1st edition
Authors: Thomas Foster, Scott E. Sampson, Cynthia Wallin, Scott W Webb