Reference no: EM132100262

A company faces the following demands for aluminum: 100 tons (month 1); 200 tons (month 2); 50 tons (month 3). During any month, a worker can produce up to 15 tons of aluminum. Each worker is paid $5,000 per month. Workers can be hired or fired at a cost of $3,000 per worker fired and $4,000 per worker hired (it takes 0 time to hire a worker). The cost of holding a ton of aluminum in inventory for one month is $100. Demand may be backlogged at a cost of $70 per ton month. That is, if 1 ton of month 1 demand is met during month 3, then a backlogging cost of $140 is incurred. At the beginning of month 1, the company has 8 workers. During any month, at most 2 workers can be hired. All demand must be met by the end of month 3. The raw material used to produce a ton of aluminum costs $300. Formulate an LP and solve using software Excel to determine how company can minimize its costs.