Formulate the aggregate plan using linear programming and solve it using Solver
What will be an ideal response?
Answer: Using the variables R = ; O = ;
S = ; I = ; EI = ending inventory
Min Cost = 5R + 7.5O + 9S + 2I
Subject to:
O ≤ 300
S ≤ 300
EIi ≥ 0 for all periods i = 1 to 5
regular productioni ≤600 for all periods i = 1 to 5
January February March April May
Forecast 500 750 1200 650 300
Beginning Inventory 100 200 50 0 0
Regular Time 600 600 600 600 300
Overtime 0 0 250 50 0
Subcontracting 0 0 300 0 0
Ending Inventory 200 50 0 0 0
The total cost of this plan is $18,950, with $13,500 spent on regular production, $2,250 on overtime production, $2,700 on subcontracting, and $500 on ending inventory charges.
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