CHAPTER 8

Production Planning

Here, we take the case of a company that has forecasted the demand (in a number of units) for a processed food product over the next six months (April–September) as given in Table 8.1.

Table 8.1

Month

April

May

June

July

August

September

Demand

200

400

700

800

300

200

The company has an inventory of 50 units that was produced in March. The company has strict policies regarding keeping of processed food products in inventory according to which inventory can only be kept for a maximum of 2 months. Thus, anything produced in April has to be sold latest by June end. Further, due to storage capacity restrictions the maximum inventory can be only 100 units. The company has estimated that keeping inventory costs 15 ...

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