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Production Schedule Optimization

The Pigskin Company is planning its football production over a six-month horizon to meet forecasted demands while minimizing production and holding costs. The company has an initial inventory of 5,000 footballs, a production capacity of 30,000 footballs per month, and a storage capacity of 10,000 footballs. The total estimated costs for production and holding over the six months amount to $1,535,562.50.

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296 views1 page

Production Schedule Optimization

The Pigskin Company is planning its football production over a six-month horizon to meet forecasted demands while minimizing production and holding costs. The company has an initial inventory of 5,000 footballs, a production capacity of 30,000 footballs per month, and a storage capacity of 10,000 footballs. The total estimated costs for production and holding over the six months amount to $1,535,562.50.

Uploaded by

sweetydx2026
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd

A B C D E F G H I J K L M N O P Q R

1 Multiperiod production model


The Pigskin Company produces footballs. Pigskin must decide how many footballs to
2
produce each month. The company has decided to use a six-month planning horizon.
3 Input data The forecasted monthly demands for the next six months are 10,000, 15,000, 30,000,
35,000, 25,000, and 10,000. Pigskin wants to meet these demands on time, knowing that
4 Initial inventory 5000 it currently has 5000 footballs in inventory and that it can use a given month’s
(100s) production to help meet the demand for that month. (For simplicity, we assume that
5 Holding cost as % of 5% production occurs during the month, and demand occurs at the end of the month.)
prod cost During each month there is enough production capacity to produce up to 30,000
6
footballs, and there is enough storage capacity to store up to 10,000 footballs at the end
of the month, after demand has occurred. The forecasted production costs per football
7 Month 1 2 3 4 5 6 for the next six months are $12.50, $12.55, $12.70, $12.80, $12.85, and $12.95,
respectively. The holding cost per football held in inventory at the end of any month is
8 Production cost/unit 12.50 12.55 12.70 12.80 12.85 12.95 figured at 5% of the production cost for that month. (This cost includes the cost of
storage and also the cost of money tied up in inventory.)
9
The selling price for footballs is not considered relevant to the production decision
10 Production plan (all quantities are in 100s of footballs) because Pigskin will satisfy all customer demand exactly when it occurs—at whatever
11 Month 1 2 3 4 5 6 the selling price is. Therefore, Pigskin wants to determine the production schedule that
minimizes the total production and holding costs.
12 Units produced 5000 20000 30000 30000 25000 10000 Objective To use LP to find the production schedule that meets demand on time and
13 <= <= <= <= <= <= minimizes total production and inventory holding costs.

14 30000 30000 30000 30000 30000 30000


Production capacity
15

16 On hand after 10000 20000 35000 35000 25000 10000


production
17 >= >= >= >= >= >=
18 Demand 10000 15000 30000 35000 25000 10000
19

20 Ending inventory 0 5000 5000 0 0 0


21 <= <= <= <= <= <=
22 Storage capacity 10000 10000 10000 10000 10000 10000
23

24 Summary of costs (all costs are in hundreds of dollars)


25 Month 1 2 3 4 5 6 Totals
26 Production costs 62,500.00 251,000.00 381,000.00 384,000.00 321,250.00 129,500.00 1,529,250.00
27 Holding costs 0.00 3,137.50 3,175.00 0.00 0.00 0.00 6,312.50
28 Totals 62,500.00 254,137.50 384,175.00 384,000.00 321,250.00 129,500.00 1,535,562.50

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