The Outboard Boat Company is in the business of manufacturing motorboats. The company needs a production plan for the year for its plant in Spring Valley, Tennessee. The Outboard Boat Company has four demands for the four different quarters of the year that need to be met. The company has to construct a minimum cost plan for the year that must incorporate the demand, inventory cost, carry over cost, regular workers, and overtime workers to meet its total production for the year. By using a minimum cost plan with standard variables the company can meet their demand and total production and only spending a cost of around $7 million for the year.
Table of Contents
1) INTRODUCTION
2) PROBLEM STATEMENT
3) MODEL FORMULATION
4) MODEL VERIFICATION
5) ASSUMPTIONS
6) RESULTS
7) SUMMARY
8) APPENDICES
Introduction
The Outboard Boat Company needs a minimum cost production plan for the year. The demand for boats is divided into four quarters of the year:
Jan.-Mar. 570 boats
Apr.-June 2165 boats
July-Sept. 3120 boats
Oct.-Dec. 735 boats
Total 6590 boats needed in the year.
The total production for the year must equal its total demand. However, a boat used to meet the demand for a particular quarter need not necessarily have been produced in that quarter. The boat could have been made in an earlier quarter and held in inventory. The inventory holding cost for a boat increases proportionately with the number of quarters it is kept in inventory. Company officials estimate constant of propor ...