Example 5.2-1 (Production-Inventory Control)
Boralis manufactures backpacks for serious hikers. The demand for its product occurs during
March to June of each year. Boralis estimates the demand for the four months to be 100, 200,
180, and 300 units, respectively. The company uses part-time labor to manufacture the backpacks
and, accordingly, its production capacity varies monthly. It is estimated that Boralis can produce
50, 180,280, and 270 units in March through June. Because the production capacity and demand
for the different months do not match, a current month's demand may be satisfied in one of
three ways.
1. Current month's production.
2. Surplus production in an earlier month.
3. Surplus production in a later month (backordering).
Example 5.2-1 (Production-Inventory Control)Boralis manufactures backpacks for serious hikers. The demand for its product occurs duringMarch to June of each year. Boralis estimates the demand for the four months to be 100, 200,180, and 300 units, respectively. The company uses part-time labor to manufacture the backpacksand, accordingly, its production capacity varies monthly. It is estimated that Boralis can produce50, 180,280, and 270 units in March through June. Because the production capacity and demandfor the different months do not match, a current month's demand may be satisfied in one ofthree ways.1. Current month's production.2. Surplus production in an earlier month.3. Surplus production in a later month (backordering).
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