Question
Lil' Racers, Inc. manufactures high performance go-karts for kids. The go-karts use wiring harnesses that can either be manufactured in-house or purchased from an outside
Lil' Racers, Inc. manufactures high performance go-karts for kids. The go-karts use wiring harnesses that can either be manufactured in-house or purchased from an outside vendor. The company utilizes three models of harnesses to fulfill the needs of all the models of their products. The table below lists the models, cost to manufacture in-house, purchase cost, as well as the forecasted demand over the next planning period.
Harness Model | Manufacturing Cost | Purchase Cost | Demand |
WH-10 | $1.38 | $1.59 | 1,250 |
WH-15 | $1.52 | $1.61 | 1,500 |
WH-20 | $1.83 | $2.15 | 800 |
Manufacturing of the harnesses requires work to be performed in up to three different departments (A, B, and C). The table below indicates the available capacity of each department as well as the unit time each harness is consuming in each department. Note that the WH-10 harness does not spend any time in department C.
Department | Capacity (hrs) | WH-10 (min) | WH-15 (min) | WH-20 (min) |
A | 10 | 0.89 | 0.95 | 1.15 |
B | 12.5 | 0.95 | 1.99 | 3.51 |
C | 20 | - | 0.60 | 0.65 |
Determine the optimal procurement strategy to satisfy the harness demands while minimizing costs. Assume that decision variables can be represented as continuous real numbers.
An MS Excel workbook containing the data described in this problem statement is linked below for your convenience. GoKart_MakeOrBuy_Student.xlsx
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