A company must meet (on time) the following demands: quarter 1—30 units; quarter 2—20 units; quarter 3—40 units. Each quarter, up to 27 units can be produced with regular-time labor, at a cost of $40 per unit. During each quarter, an unlimited number of units can be produced with overtime labor, at a cost of $60 per unit. Of all units produced, 20% arc unsuitable and cannot be used to meet demand. Also, at the end of each quarter, 10% of all units on hand spoil and cannot be used to meet any future demands. After each quarter’s demand is satisfied and spoilage is accounted for, a cost of $ 15 per unit is assessed against the quarter’s ending inventory. Formulate an LP that can be used to minimize the total cost of meeting the next three quarters’ demands. Assume that 20 usable units are available at the beginning of quarter 1.
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