The Delta company uses three raw materials to make cakes. Delta istrying to reduce warehousing costs and establishes three policies to thatend:i) The annual number of orders for all products must be at least 20 percontractual terms with transportation providers.ii) The average inventory in units must be a maximum of 1800.iii) Because the raw material is perishable, there can never be more than2000 units in inventory of raw material 1. Raw material 2 has amaximum allowed of 1200 units and the raw material 3 can storemaximum 400 units. The following table shows the product information:Materia DemandaCostos por unidadCosto porprima(u/año)ordenar ($)22002300250046503300010100Consider an interest rate of 10% per year.A) Formulate the problem as a mathematical programming modelthat minimizes the total annual cost.b) Represent the problem in a single equation including theconstraints in terms of lambdac) Find the optimized batch sizes for the company's raw materialscomplying with the imposed constraints

Answered: A) Formulate the problem as a…

Purchasing and Supply Chain Management

6th Edition

ISBN:9781285869681

Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson

Publisher:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson

Chapter2: The Purchasing Process

Section: Chapter Questions

Problem 1GPE

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The chapter presented various approaches for the control of inventory investment. Discuss three additional approaches not included that might involve supply chain managers.
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A) Formulate the problem as a mathematical programming model that minimizes the total annual cost. b) Represent the problem in a single equation including the constraints in terms of lambda c) Find the optimized batch sizes for the company's raw materials complying with the imposed constraints