You are asked to solve the same problem using a network modeling approach. In so doing, assume that the $1.5 carrying cost is applied to inventory at the end of each month.

a. Draw a network flow model for this problem.

b. Create a spreadsheet model for this problem and solve it using Solver. Report the optimal solution (i.e. values for all the decision variables) and the value of the objective function in your report. In addition, save your work in Excel and upload the worksheet.

Original Question is here.

Acme Manufacturing makes a variety of household appliances at a single manufacturing facility. The expected demand for one of these appliances during the next 4 months is shown in the following table along with the expected production costs and the expected production capacity:

Acme estimates it costs $1.50 per month for each unit of this appliance carried in inventory (estimated by averaging the beginning and ending inventory levels each month). Currently, Acme has 120 units in inventory on hand for this product. To maintain a level workforce, the company wants to produce at least 400 units per month. The company also wants to maintain a safety stock of at least 50 units per month. Acme wants to determine how many of each appliance to manufacture during each of the next 4 months to meet the expected demand at the lowest possible total cost.

Month 1 2 3 4 Demand 420 580 310 540 Production Cost $49.00 $45.00 $46.00 $47.00 Production Capacity 500 520 450 550