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CASE: PERFORMANCE LAWN EQUIPMENT Elizabeth Burke wants to develop a model to more effec - tively plan production for the next year. Currently, PLE has
CASE: PERFORMANCE LAWN EQUIPMENT
Elizabeth Burke wants to develop a model to more effectively plan production for the next year. Currently, PLE
has a planned capacity of producing mowers each
month, which is approximately the average monthly
demand over the previous year. However, looking at the
unit sales figures for the previous year, she observed that
the demand for mowers has a seasonal fluctuation, so with
this level production strategy, there is overproduction in
some months, resulting in excess inventory buildup, and
underproduction in others, which may result in lost sales
during peak demand periods.
Ms Burke explained that she could change the production rate by using planned overtime or undertime producing more or less than the average monthly demand
but this incurs additional costs, although it may offset the
cost of lost sales or of maintaining excess inventory. Consequently, she believes that the company can save a significant amount of money by optimizing the production plan.
Ms Burke saw a presentation at a conference about a
similar model that another company used but didnt fully
understand the approach. The PowerPoint notes didnt
have all the details, but they did explain the variables and
the types of constraints used in the model. She thought
they would be helpful to you in implementing an optimization model. Here are the highlights from the presentation:
Variables:
Xt planned production in period t Month NA SA Eur Pac China World
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
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