Determine the optimum number of engines to be produced


The demand for a product over the next ?ve quarters is 200, 150, 300,250,and 400 units. The manufacturer supplying the engine has di?erent production capacities estimated at 180,230,430,300, and 300 for the ?ve quarters. The manufacturer may use overtime to ?ll the immediate demand, if necessary. The overtime capacity for each period is half the regular capacity. The production costs per unit for the ?ve periods are $100, $96, $116, $102, and $106, respectively. The overtime production cost per engine is 50% higher than the regular production cost. If an engine is produced now for use in later periods, an additional storage cost of $4 per engine per period is incurred. Back-ordering is allowed with a penalty of $5 per engine per period. Formulate the problem as a transportation model and solve it in TORA. Determine the optimum number of engines to be produced during regular time and overtime of each period.

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Operation Management: Determine the optimum number of engines to be produced
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