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Problem Description

Many problems are multiperiod, where a series of decisions have to be made over time. For instance, in our very first SilComputer example, production decisions for computers have to be made with the future in mind. In this example, it would be easy to work with both desktop and notebook computers but let's work just with notebook computers.

SilComputer needs to meet the demand of its largest corporate and educational customers for notebook computers over the next four quarters (before its current model becomes obsolete). SilComputer currently has 5,000 notebook computers in inventory. Expected demand over the next four quarters for its notebook is 7,000; 15,000; 10,000; and 8,000. SilComputer has sufficient capacity and material to produce up to 10,000 computers in each quarter at a cost of $2000 per notebook. By using overtime, up to an additional 2,500 computers can be produced at a cost of $2200 each. Computers produced in a quarter can be used either to meet that quarter's demand, or be held in inventory for use later. Each computer in inventory is charged $100 to reflect carying costs.

How should SilComputer meet its demand for notebooks at minimum cost?



Michael A. Trick
Mon Aug 24 14:40:57 EDT 1998