How would you solve set this question up to use solver? A manufacturer of motorcycle accessories wants to optimize the production schedule for its best-selling motorcycle stand. Below are relevant inputs:
2% of each month's new sales (anticipated new sales) will be returned for a refund (for a reason other than a defect). Assume that these returns will happen in the following month, and that in the month after that, the product can be sold as an "open-box" product. The company assesses holding costs on all items held in stock from month-to-month. This also applies to returns. The cost of holding products is always based on the current month's production cost, even if some of the products being held are returns from the previous month. The company assigns a 5% of monthly production cost to each item held in inventory between months.
All demand from anticipated sales must be met on time and production capacity cannot be exceeded. Configure and run solver to find a production schedule that optimizes total costs.
Initial inventory 50
Holding cost as % of prod. cost 5%
Returned Products 2%
Month 1 2 3 4 5 6
Production Cost/Unit $95 $105 $100 $80 $75 $95
Production Capacity 540 600 420 420 455 600
Anticipated new sales 400 450 550 600 400 350