Multi-period production scheduling

The Tots Toys Company is trying to schedule production of two very popular toys for the next three
months: a rocking horse and a scooter. Information about both toys is given below.

Begin. Invty. Required Required Production Production

Toy June 1 Plastic Time Cost Cost
Rocking Horse 25 5 2 12 1
Scooter 55 4 3 14 1.2

Plastic Time Monthly Demand Monthly Demand

Summer Schedule Available Available Horse Scooter
June 3500 2100 220 450
July 5000 3000 350 700
August 4800 2500 600 520

Develop a model that would tell the company how many of each toy to produce during each month. You are to
minimize total cost. Inventory cost will be levied on any items in inventory on June 30, July 31, or August 31
after demand for the month has been satisfied. Your model should make use of the relationship
Beginning Inventory + Production - Demand = Ending Inventory
for each month. The company wants to end the summer with 150 rocking horses and 60 scooters as
beginning inventory for Sept. 1. Don't forget to define your decision variables.

Let Pij = number of toy i to produce in month j

Sij = surplus (inventory) of toy i at end of month j

Min 12P11 + 12P12 + 12P13 + 14P21 + 14P22 + 14P23 + 1S11 + 1S12 + 1S13 + 1.2S21 + 1.2S22 + 1.2S23
s.t. P11 - S11 = 195
S11 + P12 - S12 = 350
S12 + P13 - S13 = 600
S13 > 150
P21 - S21 = 395
S21 + P22 - S22 = 700
S22 + P23 - S23 = 520
S23 > 60
5P11 + 4P21 < 3500
5P12 + 4P22 < 5000
5P13 + 4P23 < 4800
2P11 + 3P21 < 2100
2P12 + 3P22 < 3000
2P13 + 3P23 < 2500
Pij, Sij > 0
A Make-or-Buy Decision
We illustrate the use of a linear programming model to determine how much of each of several component
parts a company should manufacture and how much it should purchase from an outside supplier. Such a decision is
referred to as a make-or-buy decision.

The Janders Company markets various business and engineering products. Currently, Janders is preparing
to introduce two new calculators: one for the business market called the Financial Manager and one for the
engineering market called the Technician. Each calculator has three components: a base, an electronic cartridge, and
a face plate or top. The same base is used for both calculators, but the cartridges and tops are different. All
components can be manufactured by the company or purchased from outside suppliers. The manufacturing costs and
purchase prices for the components and manufacturing times (in minutes) for the components are summarized in
Table 1.

Janders' forecasters indicate that 3000 Financial Manager calculators and 2000-Technician calculators will
be needed. However, manufacturing capacity is limited. The company has 200 hours of regular manufacturing time
and 50 hours of overtime that can be scheduled for the calculators. Overtime involves a premium at the additional
cost of $9 per hour.

Table 1 MANUFACTURING COSTS AND PURCHASE PRICES FOR JANDERS' CALCULATOR

COMPONENTS
Cost Per Unit
Component Manufacture (Regular Purchase Manufacturing Time
Time) (minutes)
Base $0.50 $0.60 1.0
Financial cartridge 3.75 4.00 3.0
Technician cartridge 3.30 3.90 2.5
Financial top 0.60 0.65 1.0
Technician top 0.75 0.78 1.5
Larkin Industries manufactures several lines of decorative and functional metal items. The most recent order has
been for 1200 door lock units for an apartment complex developer. The sales and production departments must
work together to determine delivery schedules. Each lock unit consists of three components: the knob and face
plate, the actual lock itself, and a set of two keys. Although the processes used in the manufacture of the three
components vary, there are three areas where the production manager is concerned about the availability of
resources. These three areas, their usage by the three components, and their availability are detailed in the table.

Resource Knob and Lock Key (each) Available

Plate
Brass Alloy 12 5 1 15000 units
Machining 18 20 10 36000 minutes
Finishing 15 5 1 12000 minutes

A quick look at the amounts available confirms that Larkin does not have the resources to fill this
contract. A subcontractor, who can make an unlimited number of each of the three components,
quotes the prices below.

Component Subcontractor Larkin Cost

Cost
Knob and Plate 10.00 6.00
Lock 9.00 4.00
Keys (set of 2) 1.00 .50

Develop a linear programming model that would tell Larkin how to fill the order for 1200 lock
sets at the minimum cost.
6. Let PM = the number of knob and plate units to make
PB = the number of knob and plate units to buy
LM = the number of lock units to make
LB = the number of lock units to buy
KM = the number of key sets to make
KB = the number of key sets to buy

Min 6PM + 10PB + 4LM + 9LB + .5KM + 1KB

s.t. 12PM + 5LM + 2KM < 15000

18PM + 20LM + 20KM < 36000
15PM + 5LM + 2KM < 12000
PM + PB > 1200
LM + LB > 1200
KM + KB > 1200
PM, PB, LM, LB, KM, KB > 0
Tots Toys makes a plastic tricycle that is composed of three major components: a handlebar-front wheel-pedal
assembly, a seat and frame unit, and rear wheels. The company has orders for 12,000 of these tricycles. Current
schedules yield the following information.

Requirements Cost to Cost to

Component Plastic Time Space Manufacture Purchase
Front 3 10 2 8 12
Seat/Frame 4 6 2 6 9
Rear wheel (each) .5 2 .1 1 3
Available 50000 160000 30000

The company obviously does not have the resources available to manufacture everything needed for the completion
of 12000 tricycles so has gathered purchase information for each component. Develop a linear programming model
to tell the company how many of each component should be manufactured and how many should be purchased in
order to provide 12000 fully completed tricycles at the minimum cost.

Let FM = number of fronts made

SM = number of seats made
WM = number of wheels made
FP = number of fronts purchased
SP = number of seats purchased
WP = number of wheels purchased

Min 8FM + 6SM + 1WM + 12FP + 9SP + 3WP

s.t. 3FM + 4SM + .5WM < 50000
10FM + 6SM + 2WM < 160000
2FM + 2SM + .1WM < 30000
FM + FP > 12000
SM + SP > 12000
WM + WP > 24000
FM, SM, WM, FP, SP, WP > 0
The Electro-Poly Corporation is the world’s leading manufacturer of slip rings. A slip ring is an electrical coupling
device that allows current to pass through a spinning or rotating connection—such as a gun turret on a ship, aircraft,
or tank. The company recently received a $750,000 order for various quantities of three types of slip rings. Each slip
ring requires a certain amount of time to wire and harness. The following table summarizes the requirements for the
three models of slip rings.

Model 1 Model 2 Model 3

Number Ordered 3,000 2,000 900
Hours of Wiring Required per Unit 2 1.5 3
Hours of Harnessing Required per Unit 1 2 1

Unfortunately, Electro-Poly does not have enough wiring and harnessing capacity to fill the order by its due date.
The company has only 10,000 hours of wiring capacity and 5,000 hours of harnessing capacity available to devote to
this order. However, the company can subcontract any portion of this order to one of its competitors. The unit costs
of producing each model in-house and buying the finished products from
a competitor are summarized below.
Model 1 Model 2 Model 3
Cost to Make $50 $83 $130
Cost to Buy $61 $97 $145

Electro-Poly wants to determine the number of slip rings to make and the number to buy to fill the customer order at
the least possible cost.

x1 = Number of model 1 slip rings to make

x2 = Number of model 2 slip rings to make
x3 = Number of model 3 slip rings to make
y1 = Number of model 1 slip rings to buy
y2 = Number of model 2 slip rings to buy
y3 = Number of model 3 slip rings to buy

The Objective Function: Minimize the total cost of filling the order.
MIN: 50x1 + 83x2 + 130x3 + 61y1 + 97y2 + 145y3
Demand Constraints
x1 + y1 = 3,000 } model 1
x2 + y2 = 2,000 } model 2
x3 + y3 = 900 } model 3
Resource Constraints
2x1 + 1.5x2 + 3x3 <= 10,000 } wiring
1x1 + 2.0x2 + 1x3 <= 5,000 } harnessing
Nonnegativity Conditions
x1, x2, x3, y1, y2, y3 >= 0
Assignment:

1. PM Computer Services produces personal computers from component parts it buys on

the open market. The company can produce a maximum of 300 personal computers per
month. PM wants to determine its production schedule for the first 6 months of the new
year. The cost to produce a personal computer in January will be $1,200. However, PM
knows the cost of component parts will decline each month so that the overall cost to
produce a PC will be 5% less each month from the base cost. The cost of holding a
computer in inventory is $15 per unit per month. Following is the demand for the
company's computers each month:
Month Demand Month Demand
January 180 April 210
February 260 May 400
March 340 June 320
Determine a production schedule for PM that will minimize total cost.

2. In Previous Problem, suppose that the demand for personal computers increases each
month, as follows:
Month Demand Month Demand
January 410 April 620
February 320 May 430
March 500 June 380
In addition to the regular production capacity of 300 units per month, PM Computer
Services can also produce an additional 200 computers per month by using overtime.
Overtime production adds 20% to the cost of a personal computer.
Determine a production schedule for PM that will minimize total cost.
3. The J. Mehta Company’s production manager is planning for a series of 1-month production periods for
stainless steel sinks. The demand for the next 4 months is as follows:

The Mehta firm can normally produce 100 stainless steel sinks in a month. This is done during regular
production hours at a cost of $100 per sink. If demand in any 1 month cannot be satisfied by regular
production, the production manager has three other choices: (1) He can produce up to 50 more sinks per
month in overtime but at a cost of $130 per sink; (2) he can purchase a limited number of sinks from a
friendly competitor for resale (the maximum number of outside purchases over the 4-month period is 450
sinks, at a cost of $150 each); or (3) he can fill the demand from his on-hand inventory. The inventory
carrying cost is $10 per sink per month. Back orders are not permitted. Inventory on hand at the
beginning of month 1 is 40 sinks. Formulate the J. Mehta production problem as a linear program.
4.
5. ABC Co. produces two products with contribution to profit per unit of Tk. 10 and Tk.9 respectively.
Total labor requirements per unit produced and total hours of labor available from personnel to each of
four departments are given below:
Dept. Pdt. 1 Pdt. 2 Total hours available
1 0.65 0.95 6500
2 0.45 0.85 6000
3 1.00 0.70 7000
4 0.15 0.30 1400

Suppose, the company has a cross training program that enables some employees to be transferred
between departments. By taking advantages of the cross training skills, a limited number of employees
and labor hours may be transferred from one department to another.
From Dept. Cross training transfers permitted to Dept. Maximum Hours Transferable
1 2 3 4
1 -- Yes Yes -- 400
2 -- -- Yes Yes 800
3 -- -- -- Yes 100
4 Yes Yes -- -- 200
How to assign workforce to maximize profit?