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    Donovan Enterprises Produces Electric Mixers

    Uploaded by

    Omar H. Hamwi
    The document presents an LP optimization problem for Donovan Enterprises to determine the optimal production levels over four quarters to minimize total costs. The objective is to satisfy quarterly demand of 40,000, 20,000, 30,000 and 70,000 units at minimum cost of production ($30/unit) and holding inventory ($2.40/unit/quarter), with a maximum production of 50,000 units and inventory limit of 30,000 units per quarter. The initial inventory is 6,000 units.

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    Donovan Enterprises Produces Electric Mixers

    Uploaded by

    Omar H. Hamwi
    315 views2 pages
    The document presents an LP optimization problem for Donovan Enterprises to determine the optimal production levels over four quarters to minimize total costs. The objective is to satisfy quarterly demand of 40,000, 20,000, 30,000 and 70,000 units at minimum cost of production ($30/unit) and holding inventory ($2.40/unit/quarter), with a maximum production of 50,000 units and inventory limit of 30,000 units per quarter. The initial inventory is 6,000 units.

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    The document presents an LP optimization problem for Donovan Enterprises to determine the optimal production levels over four quarters to minimize total costs. The objective is to satisfy quarterly demand of 40,000, 20,000, 30,000 and 70,000 units at minimum cost of production ($30/unit) and holding inventory ($2.40/unit/quarter), with a maximum production of 50,000 units and inventory limit of 30,000 units per quarter. The initial inventory is 6,000 units.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    315 views2 pages

    Donovan Enterprises Produces Electric Mixers

    Uploaded by

    Omar H. Hamwi
    The document presents an LP optimization problem for Donovan Enterprises to determine the optimal production levels over four quarters to minimize total costs. The objective is to satisfy quarterly demand of 40,000, 20,000, 30,000 and 70,000 units at minimum cost of production ($30/unit) and holding inventory ($2.40/unit/quarter), with a maximum production of 50,000 units and inventory limit of 30,000 units per quarter. The initial inventory is 6,000 units.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 2

    Donovan Enterprises produces electric mixers.

    Demands for the next four


    quarters are: 40000, 20000, 30000,and 70000. Each quarter’s demand must be
    satisfied in the same quarter. Production cost is estimated to be $30 per mixer.
    Due to limited number of machines, production is limited at a maximum of
    50000 per quarter. Excess production can be stored in the inventory to satisfy
    future demand. However, finance department requires that the inventories
    cannot exceed 30000 mixers. Donovan incurs a holding cost of $2.40 per mixer
    per quarter. At the beginning of quarter 1, 6000 mixers are available.
    Formulate an LP to develop a 4-quarter production plan to satisfy Donovan’s
    demand requirements at the minimum total cost.

    Quarter Demand Initial Inventory Quarter Final Inventory Maximum Cost


    Producti Value
    on
    X1 40000 6000 X1 X1+6000-40000 30000 32.4(X1+6000)
    X2 20000 X1+6000 - 40000 X2 X1+X2-36000 30000 32.4(X1+X2-36000)
    X3 30000 X1+X2-36000-30000 X3 X1+X2+X3- 30000 32.4(X1+X2+X3-66000)
    66000
    X4 70000 X1+X2+X3-66000- X4 X1+X2+X3+X4- 0 32.4(X1+X2+X3+X4-136000)
    70000 136000

    Constrictions of Inventory
    X1<64000
    X1>36000
    X1+X2<66000
    X1+X2>56000
    X1+X2+X3=96000
    X1+X2+X3+X4<136000
    X1+X2+X3+X4>206000
    X1+X2+X3+X4=160000
    Total Cost

    32.4(X1+6000)
    32.4(X1+X2-36000)
    32.4(X1+X2+X3-66000)
    32.4(X1+X2+X3+X4-136000)

    4*32.4X1 + 3*32.4X2 + 2*32.4X3 + 32.4X4 -32.4*232000

    129.6X1 + 97.2X2 + 64.8X3 + 32.4X4 -7516800

    This is my objective function, then


    F(X1,X2,X3,X4) = 129.6X1 + 97.2X2 + 64.8X3 + 32.4X4 -7516800
    We should minimize this function

    Results
    Variables 64000 2000 30000 58000    
    Objective           4795200

    Under this form, each quarter we have follow:

    Quarter Value Initial Final Demand Stored

    X1 64000 6000 70000 40000 30000


    X2 2000 30000 32000 20000 12000
    X3 30000 12000 42000 30000 12000
    X4 58000 12000 70000 70000 0

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