Question

Suppose that production planning is to be done for the next 5 months, where the respective demands are D1 = 10, D2 = 25, D3 = 15, D4 = 10, and D5 = 20. The setup cost is $9,000, the unit production cost is $3,000, and the unit holding cost is $800. (a) Use the deterministic periodic-review model to determine the optimal production schedule that satisfies the monthly requirements. (b) What is the total cost including the production cost? TC = total variable cost of an optimal policy for periods 1, 2, ..., n when period 1 starts with zero inventory (before producing), for n = 1, 2, ..., N. TC = min Î£(i=1 to n) {Ci + H[Î£(j=i+1 to n) (j-i)Dj]}, where n can be viewed as an index that denotes the (end of the) period when the inventory reaches a zero level for the first time after production at the beginning of period 1.

          Suppose that production planning is to be done for the next 5 months, where the respective demands are D1 = 10, D2 = 25, D3 = 15, D4 = 10, and D5 = 20. The setup cost is $9,000, the unit production cost is $3,000, and the unit holding cost is $800.

(a) Use the deterministic periodic-review model to determine the optimal production schedule that satisfies the monthly requirements.

(b) What is the total cost including the production cost?
TC = total variable cost of an optimal policy for periods 1, 2, ..., n when period 1 starts with zero inventory (before producing), for n = 1, 2, ..., N. TC = min Î£(i=1 to n) {Ci + H[Î£(j=i+1 to n) (j-i)Dj]}, where n can be viewed as an index that denotes the (end of the) period when the inventory reaches a zero level for the first time after production at the beginning of period 1.

Added by Tom T.

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