National steel corporation produces special-purpose steel

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The National Steel Corporation (NSC) produces a special-purpose steel that is used in the aircraft and aerospace industries. The marketing department of NSC has received orders for 2400, 2200, 2700 and 2500 tons of steel during each of the next four months. NSC can meet these demands by producing the steel, by drawing from its inventory or by a combination of both.

The production costs per ton of steel during each of the next four months are projected to be $7400, $7500, $7600 and $7800. Production capacity can never exceed 4000 tons in any month. All production takes place at the beginning of the month and immediately thereafter the demand is met. The remaining steel is then stored in inventory at a holding cost of $120/ton for each month that it remains there.

NSC currently has an inventory of 1000 tons of steel. The inventory level at the end of the fourth month must be at least 1500 tons. Formulate a linear program (5 steps) to help NSC minimize the total cost (production + holding) over the next four months while satisfying the demand. Solve the linear program using Excel.

Reference no: EM132247103

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