1. ABC distribution does delayed differentiation of products for a customer at its distribution facility. The forecasted demand for one of these products during the next five months is 420, 580, 310, 450 and 540 400 respectively. The per unit costs and the capacity availability for producing these items are given below.

Month

1 2 3 4 5

Customization Cost $24 $40 $36 $54 $60

Capacity 500 520 450 550 400

The inventory costs is $0.55 per month for each unit of the product carried in inventory (estimated by inventory levels of each month). ABC began the contract with 90 units of inventory (safety stock) on hand for this product. Their production plan calls for producing at least 400 units per month. To avoid demand risk, ABC wants to maintain a minimum inventory level of at least 50 units for 1, 2, and 3 rd month. On the fourth month they want the inventory level to be at most 90 units as part of the ramping down operations. Create a spreadsheet model for this problem and solve it using Solver to minimize the total cost (sum of customization and inventory costs) for delayed differentiation for the 5 months in the planning horizon.