Problem
A manufacturer of integrated circuits is planning production for the next four months. The forecast demand for the circuits is shown in the following table.
At the beginning of September, the warehouse is expected to be completely empty. There is room for no more than 1,800 integrated circuits to be stored. Holding costs for both types is $0.05 per unit per month. Because workers are given time off during the holidays, the manufacturer wants to have at least 800 IC341s and 850 IC256s already in the warehouse at the beginning of January.
Production costs are $1.25 per unit for IC341 and $1.35 per unit for IC256. Because demand for raw materials is rising, production costs are expected to rise by $0.05 per month through the end of the year. Labor to make model IC341 is 0.45 hours per unit; making model IC256 takes 0.52 hours of labor. Management has agreed to schedule at least 1,000 hours per month of labor. As many as 200 extra hours per month are available to management at the same cost, except during the month of December, when only 100 extra hours are possible. What should be the production schedule for IC341 and IC256 for the four months?