Question
A company that produces chairs has obtained a demand forecast for the next three months. To meet the demand, the company can produce chairs using
A company that produces chairs has obtained a demand forecast for the next three months. To meet the demand, the company can produce chairs using regular production time, overtime, and using a subcontractor. The demand and projected capacities for three production options are in the following table:
Month | |||
1 | 2 | 3 | |
Demand (units) | 25,000 | 35,000 | 45,000 |
Regular Capacity | 35,000 | 30,000 | 20,000 |
Overtime Capacity | 5,000 | 5,000 | 5,000 |
Subcontractor Capacity | 7,500 | 2,500 | 3,500 |
The company can produce chairs at a cost of $50/unit in regular time and $70/unit using overtime. The subcontractor charges $90/unit to produce chairs. Placing chairs in storage for future use costs the company $20/unit per month.
(a) Construct a network representation of the production problem.
(b) Is the company capable of meeting the demand requirements?
(c) Convert the problem into a linear program.
(d) Find the minimum cost to meet the demand requirements. What will be the cost to produce the chairs?
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