Global Minimum manufactures bikini swimming suits. Their products demands are highly seasonal. The demand forecasts over the next four quarters are: Quarter 1 – 850 dozen suits, Quarter 2 – 2800 dozen suits, Quarter 3 – 600 dozen suits, and Quarter 4 – 500 dozen suits. The company can produce 1200 dozen suits per quarter. So inventories must be built up to meet peak demand. The unit holding cost is $15 per dozen per quarter. The company will have 1500 dozen suits in inventory at the beginning of Quarter 1. The company wants to meet demand and minimize inventory cost.
Formulate an LP to determine a production plan which minimizes the inventory cost and meets the demand on time in the next four quarters.
In order to get full points, your mathematical LP model must include the definition of decision variables, objective function and all constraints needed.