QMB4701 Assignment 1 Linear Programming Solutions

Aire-Co produces home dehumidifiers at two different plants in Atlanta and Phoenix. The per-unit cost of production in Atlanta and Phoenix is $400 and $360, respectively. Each plant can produce a maximum of 300 units per month. Inventory holding costs are assessed at $30 per unit in beginning inventory each month. Aire-Co estimates the demand for its product to be 300, 400, and 500 units, respectively, over the next three months. Aire-Co wants to be able to meet this demand at minimum cost.

a. Formulate an LP model for this problem.

b. Implement your model in a spreadsheet and solve it.

c. What is the optimal solution?

d. How does the solution change if each plant is required to produce at least 50 units per month?

e. How does the solution change if each plant is required to produce at least 100 units per month?