# Sailco Corporation must determine how many sailboats to produce during each of the next 4 quarters..

Sailco Corporation must determine how many sailboats to

produce during each of the next 4 quarters. The demand during each of the next

four quarters is as follows: first quarter, 40 sailboats; second quarter, 60

sailboats; third quarter, 75 sailboats; fourth quarter, 25 sailboats. Sailco

must meet demands on time. At the beginning of the first quarter, Sailco has an

inventory of 10 sailboats. At the beginning of each quarter, Sailco must decide

how many sailboats to produce during that quarter. For simplicity, assume that

sailboats manufactured during a quarter can be used to meet demand

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Sailco Corporation must determine how many sailboats to

produce during each of the next 4 quarters. The demand during each of the next

four quarters is as follows: first quarter, 40 sailboats; second quarter, 60

sailboats; third quarter, 75 sailboats; fourth quarter, 25 sailboats. Sailco

must meet demands on time. At the beginning of the first quarter, Sailco has an

inventory of 10 sailboats. At the beginning of each quarter, Sailco must decide

how many sailboats to produce during that quarter. For simplicity, assume that

sailboats manufactured during a quarter can be used to meet demand for that

quarter. During each quarter, Sailco can produce up to 40 sailboats with

regulartime labor at a total cost of $400 per sailboat. By having employees work

overtime during a quarter, Sailco can produce additional sailboats with

overtime labor at a total cost of $450 per sailboat. At the end of each quarter

(after production has occurred and the current quarters demand has been

satisfied), a holding cost of $20 per sailboat is incurred.

a. Determine a production schedule to minimize the sum of

production and inventory holding costs during the next 4 quarters.

b. Suppose Sailco wants to see whether any changes in the

$20 holding cost per sailboat could induce the company to carry more or less

inventory. Revise your model so that SolverTable can be used to investigate the

effects on ending inventory during the 4-month interval of systematic changes

in the unit holding cost. (Assume that even though the unit holding cost

changes, it is still constant over the 4-month interval.) Are there any

(nonnegative) unit holding costs that would induce Sailco to hold more

inventory than it holds when the holding cost is $20? Are there any unit

holding costs that would induce Sailco to hold less inventory than it holds

when the holding cost is $20?

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