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The production manager at Old-Time Boats must determine how many Party Pontoons to produce over the next 6 months. The beginning inventory of Party Pontoons is 400 units. The demand for the next 6 months is as follows: Month 1 = 1,000 units; Month 2 = 1,500 units; Month 3 = 1,800 units; Month 4 = 2,000 units; Month 5 = 1,500 units; Month 6 = 1,300 units. The capacity in each month for Months 1 – 3 is 1,650 units per month. The capacity in each month for Months 4 – 6 is 1,725 units per month. The production cost in Months 1 – 3 is $8,000 per unit. The production cost in Months 4 – 6 is $9,900 per unit. Inventory holding cost for any units in ending inventory each month in Months 1 – 3 is $600/unit/month and for Months 4 – 6 is $950/unit/month. Top management has specified that ending inventory in Month 6 should be at least 140 units. (a) Formulate the linear programming model within your Word Report: Define the decision variables, the objective function, and the constraints. (b) Create the Solver model for this problem. Run the model. How many Party Pontoons should Old-Time Boats produce in each of the next 6 months? What will be the ending inventory each month? What will be the estimated total cost be over the next 6 months? Show your answers in your Word document.
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