Mondo Motorcycles is determining its production schedule for the next four quarters. Demand for motorcycles will be as follows: quarter 1—40; quarter 2—70; quarter 3—50;quarter 4—20. Mondo incurs four types of costs.1 It costs Mondo $400 to manufacture each motorcycle.2 At the end of each quarter, a holding cost of $100 per motorcycle is incurred.3 Increasing production from one quarter to the next incurs costs for training employees. It is estimated that a cost of $700 per motorcycle is incurred if production is increasedfrom one quarter to the next.4 Decreasing production from one quarter to the next incurs costs for severance pay, decreasing morale, and so forth. It is estimated that a cost of $600 per motorcycle is incurred if production is decreased from one quarter to the next.All demands must be met on time, and a quarter’s production may be used to meet demand for the current quarter. During the quarter immediately preceding quarter 1, 50 Mondos were produced. Assume that at the beginning of quarter 1, no Mondos are in inventory.Formulate an LP that minimizes Mondo’s total cost during the next four quarters.
Mondo Motorcycles is determining its production
quarter 4—20. Mondo incurs four types of costs.
1 It costs Mondo $400 to manufacture each motorcycle.
2 At the end of each quarter, a holding cost of $100 per motorcycle is incurred.
3 Increasing production from one quarter to the next incurs costs for training employees. It is estimated that a cost of $700 per motorcycle is incurred if production is increased
from one quarter to the next.
4 Decreasing production from one quarter to the next incurs costs for severance pay, decreasing morale, and so forth. It is estimated that a cost of $600 per motorcycle is incurred if production is decreased from one quarter to the next.
All demands must be met on time, and a quarter’s production may be used to meet demand for the current quarter. During the quarter immediately preceding quarter 1, 50 Mondos were produced. Assume that at the beginning of quarter 1, no Mondos are in inventory.
Formulate an LP that minimizes Mondo’s total cost during the next four quarters.
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