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Problem1 Acme Manufacturing Acme Manufacturing makes a variety of household appliances at a single manufacturing facility. The expected demand for one of these appliances during the next 4 months is shown in the following table along with the expected production costs and the expected Month Demand Production Cost Production Capacity 1 420 $49.00 500 2 580 $45.00 520 3 310 $46.00 450 4 540 $47.00 550 capacity for producing these items. Acme estimates it costs $1.50 per month for each unit of this appliance carried in inventory (estimated by averaging the beginning and ending inventory levels each month). Currently, Acme has 120 units in inventory on hand for this product. To maintain a level workforce, the company wants to produce at least 400 units per month. The company also wants to maintain a safety stock of at least 50 units per month. Acme wants to determine how many of each appliance to manufacture during each of the next 4 months to meet the expected demand at the lowest possible total cost. Questions: a) Formulate an LP model for this problem. b) Create a spreadsheet model for this problem and solve it using Solver. c) What is the optimal solution? d) How much money could Acme save if they were willing to drop the restriction about producing at least 400 units per month?

Problem1 Acme Manufacturing Acme Manufacturing makes a variety of household appliances at a single manufacturing facility. The expected demand for one of these appliances during the next 4 months is shown in the following table along with the expected production costs and the expected Month Demand Production Cost Production Capacity 1 420 $49.00 500 2 580 $45.00 520 3 310 $46.00 450 4 540 $47.00 550 capacity for producing these items. Acme estimates it costs $1.50 per month for each unit of this appliance carried in inventory (estimated by averaging the beginning and ending inventory levels each month). Currently, Acme has 120 units in inventory on hand for this product. To maintain a level workforce, the company wants to produce at least 400 units per month. The company also wants to maintain a safety stock of at least 50 units per month. Acme wants to determine how many of each appliance to manufacture during each of the next 4 months to meet the expected demand at the lowest possible total cost. Questions: a) Formulate an LP model for this problem. b) Create a spreadsheet model for this problem and solve it using Solver. c) What is the optimal solution? d) How much money could Acme save if they were willing to drop the restriction about producing at least 400 units per month?

Practical Management Science
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter11: Simulation Models
Section: Chapter Questions
Problem 69P: The Tinkan Company produces one-pound cans for the Canadian salmon industry. Each year the salmon...
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Problem1 Acme Manufacturing Acme Manufacturing makes a variety of household appliances at a single manufacturing facility. The expected demand for one of these appliances during the next 4 months is shown in the following table along with the expected production costs and the expected Month Demand Production Cost Production Capacity 1 420 $49.00 500 a) Formulate an LP model for this problem. b) Create a spreadsheet model for this problem and solve it using Solver. 2 580 $45.00 520 3 310 $46.00 450 4 540 $47.00 550 capacity for producing these items. Acme estimates it costs $1.50 per month for each unit of this appliance carried in inventory (estimated by averaging the beginning and ending inventory levels each month). Currently, Acme has 120 units in inventory on hand for this product. To maintain a level workforce, the company wants to produce at least 400 units per month. The company also wants to maintain a safety stock of at least 50 units per month. Acme wants to determine how many of each appliance to manufacture during each of the next 4 months to meet the expected demand at the lowest possible total cost. Questions: c) What is the optimal solution? d) How much money could Acme save if they were willing to drop the restriction about producing at least 400 units per month?
Transcribed Image Text:Problem1 Acme Manufacturing Acme Manufacturing makes a variety of household appliances at a single manufacturing facility. The expected demand for one of these appliances during the next 4 months is shown in the following table along with the expected production costs and the expected Month Demand Production Cost Production Capacity 1 420 $49.00 500 a) Formulate an LP model for this problem. b) Create a spreadsheet model for this problem and solve it using Solver. 2 580 $45.00 520 3 310 $46.00 450 4 540 $47.00 550 capacity for producing these items. Acme estimates it costs $1.50 per month for each unit of this appliance carried in inventory (estimated by averaging the beginning and ending inventory levels each month). Currently, Acme has 120 units in inventory on hand for this product. To maintain a level workforce, the company wants to produce at least 400 units per month. The company also wants to maintain a safety stock of at least 50 units per month. Acme wants to determine how many of each appliance to manufacture during each of the next 4 months to meet the expected demand at the lowest possible total cost. Questions: c) What is the optimal solution? d) How much money could Acme save if they were willing to drop the restriction about producing at least 400 units per month?
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