Question 3 (20 points) Given the following demand for your donuts and your capac

Question

Question 3 (20 points) Given the following demand for your donuts and your capacity for the next 7 months: Month:1 2 345 6 7 Demand: 40 76 38 11 42 77 80 Capacity: 65 65 60 150 150 40 60 i) Is this plan feasible at all? i) If it is-perform a Lot-Shifting so you get a strictly feasible production vector. i) Each setup costs you $100 and the holding costs are $1 per item per period. Given your feasible production schedule from step (ii) perform a cost reduction step and show your best production vector. How much money did you save?

Explanation / Answer

If at the any point of time the demand exceeds supply (capacity), plan will not work out.

cumutive capacity = total capacity upto that month

cumulative inventory = total inventory left after meeting demand = cumulative capacity - cumulative demand

Cumulative inventory is always positive in all the months, it means all the demand can be met with the plan.

Month demand capacity Cumulative capacity Cumulative inventory 1 40 65 65 25 2 76 65 130 14 3 38 60 190 36 4 11 150 340 175 5 42 150 490 283 6 77 40 530 246 7 80 60 590 226

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