The chasing demand staretgy was also proposed to production department as to kee

Question

The chasing demand staretgy was also proposed to production department as to keep minimum inventory.

$10=production cost

$1,000= hiring cost

$500= firing cost

Total cost= (12,000 x $10)+(26 x 1,000)+(6 x 500)= $149,000

If you were to use a mathmatical modeling approach for optimal production strategy, write the objective function of the model.

Month Demand Production Inventory # of workers Hired Fired Jan 1,000 1,000 0 10 0 Feb 400 400 0 4 6 March 400 400 0 4 Apr 400 400 0 4 May 400 400 0 4 Jun 400 400 0 4 Jul 500 500 0 5 1 Aug 500 500 0 5 Sep 1,000 1,000 0 10 5 Oct 1,500 1,500 0 15 5 Nov 2,500 2,500 0 25 10 Dec 3,000 3,000 0 30 5 Total 12,000 12,000 0 26 6

Explanation / Answer

p=production cost

h= hiring cost

f= firing cost

i= inventory cost

Xpm=Production in month m

Xim= inventory in month m

Xhm = hiring in month m

Xfm = firing in month m

Objective function

Min Total cost =Z = Sum of (p*Xpm+i*Xim + h*Xhm + f*Xfm) for m jan to Dec (1 to 12)

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