INVENTORY MANAGEMENT EXCERCISE

Multi-items Restricted Model

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A fruit stand stocks three products - apples, cantaloupes, and watermelons. The demands (for a season), unit costs, ordering costs, and size of the three items are: Product Demand Unit costs Ordering costs Size (units of space) Apples Cantaloupes Watermelons 2500 1000 600 0.50 1.00 3.50 2,00 25.00 20.00 30.00 3 10 Assume an inventory carrying cost rate of 10 percent per season. Consider that the stand has only 2000 units of space. Find: 1. (60 pts.) Using a Lagrange multiplier approach, determine the batch sizes for the constrained problem Answer:_ _Q1, Q2, Q3_ 2. (30 pts.) What is the value of the Lagrange multiplier obtained in the previous question? Answer: A fruit stand stocks three products - apples, cantaloupes, and watermelons. The demands (for a season), unit costs, ordering costs, and size of the three items are: Product Demand Unit costs Ordering costs Size (units of space) Apples Cantaloupes Watermelons 2500 1000 600 0.50 1.00 3.50 2,00 25.00 20.00 30.00 3 10 Assume an inventory carrying cost rate of 10 percent per season. Consider that the stand has only 2000 units of space. Find: 1. (60 pts.) Using a Lagrange multiplier approach, determine the batch sizes for the constrained problem Answer:_ _Q1, Q2, Q3_ 2. (30 pts.) What is the value of the Lagrange multiplier obtained in the previous