Question
A company faces the projected demand shown for the next 8 weeks. Unit production costs are shown in the table and very each week. A
A company faces the projected demand shown for the next 8 weeks. Unit production costs are shown in the table and very each week. A storage cost is assessed on ending inventory and varies as shown in the table. At the beginning of week 1, the company has 10 units on hand. Only 70% of production in any one week can be used during the current week and the remainder will be available in the next week. The remainder can be used in the following weeks. No backlogging (you can't have negative ending inventory). Assume you can produce fractional quantities.
Determine the production required to minimize the cost of meeting demand for the next 8 weeks. Summarize your findings.
Week | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 |
Demand | 20 | 10 | 15 | 17 | 23 | 21 | 14 | 18 |
UnitCost | $13.00 | $14.00 | $15.00 | $14.50 | $13.75 | $16.00 | $17.00 | $16.50 |
Stg Cost | $2.00 | $2.00 | $2.00 | $3.00 | $2.00 | $2.00 | $2.00 | $4.00 |
Beg Inv | 10 |
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