Electronic Hall produces Televisions and DVD Players. During the coming year qua
ID: 2383839 • Letter: E
Question
Electronic Hall produces Televisions and DVD Players. During the coming year quarterly demand for these products is as shown in the following table:
Product
Q1
Q2
Q3
Q4
Televisions
1500
1000
2000
1200
DVD Players
1000
2000
1500
2500
The proprietor wants a production schedule that meets the demand requirements in each quarter. Leadership has also decided that the inventory level for each product must be at least 150 units at the end of each Quarter. There is no inventory on hand at the start of the first quarter.
During any quarter 12000 hours of production time are available. A Television requires 2 hours and a DVD Player requires 3 hours of production time. Televisions cannot be manufactured in the fourth quarter because the company plans to modify tooling for a new product line.
Assume that each Television left in inventory at the end of a quarter incurs a holding cost of $5 and that each DVD Player left in inventory at the end of a quarter incurs a cost of $7. The proprietor wants to plan its production schedule over the year in such a way that it meets the quarterly demands and minimizes the total inventory cost.
1. Formulate and solve this production planning problem.
2. Assume the solution need not be integer.
3. Without resolving state what an extra hour of production time in Q3 is worth.
Product
Q1
Q2
Q3
Q4
Televisions
1500
1000
2000
1200
DVD Players
1000
2000
1500
2500
Explanation / Answer
Televisions
DVD Players
Extra Hours of productio time in Q3 reqired is 2400 hours i.e (1200*2)
Working Notes
Electronic Hall produces Televisions and DVD Players
Inventories Level is 150 units at the end of each Quarter & there is no inventory on hand at the start of the first quarter
During any quarter 12000 hours of production time are available
A Television requires 2 hours and a DVD Player requires 3 hours of production time
Product
Q1
Q2
Q3
Q4
Televisions
1500
1000
2000
1200
DVD Players
1000
2000
1500
2500
Television DVD Total Inventory cost
Quarter 1 1650*2 =3300 1150*3 =3450 = 6750 150*5+150*7 =1800
Quarter 2 1000*2 =2000 2000*3= 6000 = 8000 150*5+150*7=1800
Quarter 3 2000*2 =4000 1500*3= 4500 = 8500 150*5+150*7=1800
1200*2 =2400 = 2400 1200*5 =6000
Quarter 4 2500*3=7500 = 7500 150*5+150*7=1800
Televisions cannot be manufactured in the fourth quarter because the company plans to modify tooling for a new product line
So to meet the demand of Television co. has to produce it in to 3rd quarter
Time required 1200*2 =2400
Time left in third quarter 12000-8500 =3500
So company should produce T.V. In third quarter it self to minimize inventories cost
Q1 Q2 Q3 Q4Televisions
1650 1000 3200DVD Players
1150 2000 1500 2500 Inventory Cost for TV 750 750 6750 750 Inventory Cost for DVD 1050 1050 1050 1050Related Questions
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