Auria will produce 3 vehicle components and knows that each start generates a cost of 5,000 pesos. The cost of the units is $ 200, $ 100 and $ 70 respectively. Annual demand is 100,000 units for Product A, 150,000 units for Product B, and 200,000 units for Product C. The inventory rate is 15% per month. Product A and B are basic and substitutable products, so there must be a minimum average inventory of 8,000 units of both. The company seeks a maximum of $ 100,000 invested money in inventory. The available warehouse space is 400m3 and product A occupies 0.5m3, product B 0.7m3 and C 1m3. Consider that product A and C allow shortages and the goodwill loss cost is $ 3 for each unit of those items. a) Formulate the problem as a mathematical programming model (objective function and constraints) that minimizes the total annual cost
Auria will produce 3 vehicle components and knows that each start generates a cost of 5,000 pesos. The cost of the units is $ 200, $ 100 and $ 70 respectively. Annual demand is 100,000 units for Product A, 150,000 units for Product B, and 200,000 units for Product C. The inventory rate is 15% per month. Product A and B are basic and substitutable products, so there must be a minimum average inventory of 8,000 units of both. The company seeks a maximum of $ 100,000 invested money in inventory. The available warehouse space is 400m3 and product A occupies 0.5m3, product B 0.7m3 and C 1m3. Consider that product A and C allow shortages and the goodwill loss cost is $ 3 for each unit of those items.
a) Formulate the problem as a mathematical programming model (objective function and constraints) that minimizes the total annual cost
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