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3. A product produced by ABC company consists of two successive operations, I and II. The table below contains data on the months of
3. A product produced by ABC company consists of two successive operations, I and II. The table below contains data on the months of January, February and March of the product. Demand (units) Capacity of operation 1 (hr) Capacity of operation 1 (hr) January 500 900 1000 February 450 650 850 March 600 550 700 Producing a unit of the product takes 0.6 hour on operation I plus 0.8 hour on operation II. Overproduction of either the semifinished product (operation I) or the finished product (operation II) in any month is allowed for use in a later month. The corresponding holding costs are $.20 and $.40 per unit per month. The production cost varies by operation and by month. For operation 1, the unit production cost is $10, $12, and $11 for January, February and March. For operation 2, the corresponding unit production cost is $15, $18, and $16. Determine the optimal production schedule for the two operations over the 3-month horizon using Excel Solver and carry out sensitivity analysis.
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