Reference no: EM132819835

Question: Model the problem using Decision Variables, Objective Function, and Constraints.

A company faces the following demands during the next three periods: period 1, 20 units; period 2, 10 units; period 3, 15 units. The unit production cost during each period is as follows: period 1, $13; period 2, $14; period 3, $15. A holding cost of $2 per unit is assessed against each period's ending inventory. At the beginning of period 1, the company has 5 units on hand. In reality, not all goods produced during a month can be used to meet the current month's demand. To model this fact, we assume that only one half of the goods produced during a period can be used to meet the current period's demands. Formulate an LP to minimize the cost of meeting the demand for the next three periods.

(Hint: Constraints such as 1 = 1+5-20 are certainly needed. Unlike our example, however, the constraint 1 ≥ 0 will not ensure that period 1's demand is met. For example, if 1 = 20, then 1 ≥ 0 will hold, but because only ½(20) = 10 units of period 1 production can be used to meet period 1's demand, 1 = 20 would not be feasible. Try to think of a type of constraint that will ensure that what is available to meet each period's demand is at least as large as that period's demand.)