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The transportation problem can be used in other situations other than transportation. For ex- ample, production-inventory control. The following table summarizes the parallels between
The transportation problem can be used in other situations other than transportation. For ex- ample, production-inventory control. The following table summarizes the parallels between the elements of the production-inventory problem and the transportation model: Transportation Supply node i Demand node j Supply amount at node i Production-inventory Production period i Demand period j Production capacity of period i Demand for period j Demand amount at node j Unit transportation cost from i to j | Unit cost (production + inventory) in period i for use at period j Solve the following production-inventory problem modeling it as a transportation problem. Soala Co. produces solar powered air conditioning systems for use in households. The periods with major demand are during Spring and Summer (i.e., through March until August). The demand starts slow, peaks in the middle of the season, and tapers off toward the end. The following table provides the production capacities and demands (in hundreds) for the six months under consideration for the Santa Clara county: Month March April May June July August Capacity 170 220 220 150 170 170 Demand 100 190 200 200 170 150 The unit production costs during March and April is $600, for months May and June is a little bit more expensive at $900, and it goes down to $700 during July and August. The holding cost per unit per month is $50, during any month. Please do the following: 1. Draw a network that depicts production-inventory problem using the same idea of the transportation problem. Identify the supply nodes, transshipment nodes (if there exist), and demand nodes in this network. Include the data shown in the above table (15 points). 2. Formulate a mathematical model for this problem utilizing the six-step process discussed in class (20 points). 3. Solve this problem utilizing Excel solver and provide the management the appropriate recommendations and expected cost (15 points).
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