# 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 quarters 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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