3-18 (Inventory management) NB Campers lnc. manufactures small camper trailers. John Dunphy, president of NB...
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3-18 (Inventory management) NB Campers lnc. manufactures small camper trailers. John Dunphy, president of NB Campers, has forecast demand for the four quarters of 2009 as follows: Quarter 1 = January, February, March; Quarter 2=April, May, June; and so on. At the beginning of the first quarter, NB Campers has an inventory of 10 campers. Dunphy has to decide how many campers to manufacture during each quarter. It costs $4500 to manufacture a camper, and NB Campers can produce a maximum of 60 campers per quarter. The company's production capabilities are such that any camper manufactured during a quarter can be used to meet demand for that quarter. Any campers manufactured but not sold during a quarter will incur a one time inventory cost of $200. Assume that the inventory holding cost for the 10 campers in inventory at the begining of the first quarter has already been accounted for in the previous year. NB Campers Inc. has to decide how many campers to produce during each quarter and how many to hold in inventory at the end of each quarter in order to minimize the combined annual cost of manufacturing and holding inventory. (a) Formulate the problem as a linear program (b) Solve using Excel
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