Reference no: EM133187465

Problem 1 The Enterprise Elastomers Company {EEC} produces the raw material for tires. EEC must decide how many tons of material to produce each month. The company has decided to use a six-month planning horizon. The forecasted monthly demands for the next six months are {in to ns} 10,000. 15,000, ao,ooo, as,ooo, as,ooo and moon. EEC wants to meet these demands on time, knowing that it currently has 5,000 tons of material in inventory and that it can use a given month's production to help meet the demand for that month. {For simplicity, assume that production occurs during the month and demand occurs at the end of the month.} During each month. there is enough production capacity to produce up to 310,000 tons of material. and there is enough inventory capacity to store up to 10,000 tons of material at the end of the month, after demand has occurred. The forecasted production costs per ton for the next six months are, in thousands of dollars per ton, $12.50, $12.55, $12.20, $12.30, $12.85 and $12.95, respectively. The holding cost incurred per ton held in inventory at the end of any month is 5% of the production cost for that month. {This cost includes the cost of storage and also the cost of moneytied up in inventory.) The selling price for the material is not considered relevant to the production decision because EEC will satisfy all customer demand exactly when it occurs - at vmatever the selling price is. Therefore, EEC wanE to determine the production schedule that minimizes the total production and inventory cosE. Find the production schedule that meet: demand on time and minimizes total production and inventory holding costs. The sheet Production Scheduling - Shell in the workbook Production Scheduling and Tatham Revisited might be useful.

Problem 2 See the sheet Tatham Revisited - Shell in the workbook: Production Scheduling and Ta?iam Revisited. It has a statement of the problem and a shell to get you started.