Deterministic Inventory Models

Operation Research

Problem
Metalco produces draft deflectors for use in home fireplaces during the months of December to March. The demand starts slow, peaks in the middle of the season and tapers off towards the end. Because of the popularity of the product,Metalco may use overtime to satisfy the demand. The following table provides the production capacities and the demands for the four winter months.

Month Regular(units) 1 2 3 4 90 100 120 110

Capacity Overtime(units) 50 60 80 70

Demand(units) 100 190 210 160

Unit production cost in any period is $6 during regular time and $9 during overtime. Holding cost per unit per month is $0.10.

Month 1 2 3

Cumulative Supply 90+50=140 140+100+60=300 300+120+80=500

Cumulative demand 100 100+190=290 290+210=500

500+110+70=680

500+160=660

1 R1 6

2 6.1 9.1 30 6 100 9 60

3 6.2 9.2 10 6.1 9.1 6 120

4 6.3 9.3 6.2 9.2 6.1

Surplus 0 0 0 0 0

90 50 40 10 100 60 120

90
O1 10 R2 O2 R3 9

O3
80 R4

9.1
6 110

0
0

80
110

O4
50

9
20

70 20

100 10

190 90 30

210 90 10

160 50

20

Optimum Solution
Period Regular1 Production Schedule Produce 90 units for period 1

Overtime1
Regular2

Produce 50 units:10 units for period 1,30 for 2 & 10 for 3.

Produce 100 units for period 2

Overtime2
Regular3 Overtime3 Regular4 Overtime4

Produce 60 units for period 2

Produce 120 units for period 3 Produce 80 units for period 3 Produce 110 units for period 4 Produce 50 units for period 4,with 20 units idle capacity

Associated Total Cost

90*$6 +10*$9 +30*$9.10 +100*$6 +60*$9 +10*$9.20 +120*$6 +80*$9 +110*$6 +50*$9 =$4685