Suzie’s Sweatshirts is a home-based company that makes upscale, handpainted swea
ID: 453852 • Letter: S
Question
Suzie’s Sweatshirts is a home-based company that makes upscale, handpainted sweatshirts for children. Forecasts of sales for the next year are:
Autumn: 125
Winter: 350
Spring: 75
Each Shirt is sold for $15. The holding cost per shirt is 6% of the selling price per quarter. The shirts are painted by part-time workers who earn $4.50 per hour during the autumn. Because of the high demand for part-time help during the winter holiday season, labor rates are higher in the winter, and Suzie must pay the workers $6.00 per hour. In the spring, labor is more difficult to keep, and Suzie finds that she must pay $5.50 per hour to get qualified help. Each shirt takes 1.5 hours to complete.
Formulate the problem to a LP model to help Suzie plan production over the three quarters to minimize the combined production and inventory holding cost. Suppose there is no inventory at the beginning of the autumn.
Explanation / Answer
If entire demand for three quarters are produced during Autumn the cost of production would be 550*4.50=$2475
holding cost for all three quarters would be 550*15*6%=$ 495 this will be same whether production is in one lot or phased each quarter
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