Question: Trejo estimates that it costs $ 1 . 5 0 per month for each unit of this appliance carried in inventory at the end of
Trejo estimates that it costs $ per month for each unit of this appliance carried
in inventory at the end of each month. Currently, Trejo has units in inventory on
hand for this product. To maintain a level workforce, the company wants to produce
at least units per month. They also want to maintain a safety stock of at least
units per month. Trejo wants to determine how many of each appliance to
manufacture during each of the next months to meet the expected demand at the
lowest possible total cost.
a Draw a network flow model for this problem.
b Create a spreadsheet model for this problem and solve it using Solver.
c What is the optimal solution?
d How much money could Trejo save if the company were willing to drop the
restriction about producing at least units per month?
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