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PRODUCTION MANAGEMENT APPLICATIONS 145

CONSTRAINTS
Final Shadow Constraint Allowable Allowable
Name Value Price R.H. Side Increase Decrease
------------- ----- ------------- ------------- ---------- ----------
Bases 5000 0.583333333 5000 2000 5000
Financial 3000 4 3000 1E+30 2333.333333
cartridges
Technician 2000 3.508333333 2000 800 2000
cartridges
Financial tops 3000 0.65 3000 1E+30 3000
Technician 2000 0.78 2000 1E+30 2000
tops
Overtime 0 0 50 1E+30 50
Manf capacity 12000 -0.083333333 12000 7000 2000

One advantage of using linear programming for production scheduling problems
is that they recur. A production schedule must be established for the current
month, then again for the next month, for the month after that and so on. When
looking at the problem each month, the production manager will find that, although
demand for the products has changed, production times, production capacities,
storage space limitations and so on are roughly the same. So, the production
manager is basically re-solving the same problem handled in previous months,
and a general linear programming model of the production scheduling procedure
may be frequently applied. Once the model has been formulated, the manager can
simply supply the data – demand, capacities and so on – for the given production
period and use the linear programming model repeatedly to develop the production
schedule.
Let us consider the case of the Bollinger Electronics Company, which produ-
ces two different electronic components for a major aeroplane engine manufac-
turer. The aeroplane engine manufacturer notifies the Bollinger sales office each
quarter of its monthly requirements for components for each of the next three
months. The monthly requirements for the components may vary considerably,
depending on the type of engine the aeroplane engine manufacturer is produc-
ing. The order shown in Table 4.3 has just been received for the next three-
month period.
After the order is processed, a demand statement is sent to the production
department. The production department must then develop a three-month produc-
tion plan for the components. In arriving at the desired schedule, the production
manager will want to identify the following:
1 Production cost.
2 Inventory, or stock, holding cost.
3 Change-in-production-level costs.
Production cost will be the actual cost of producing the components. Inventory, or
stock, holding cost will measure the cost of holding finished components in stock
until they are shipped to the customer. It may be, for example, in April, that we
decide to produce more than the customer needs in that month. Surplus production
would then need to be stored until May or even June. Change-in-production-level
costs refer to costs incurred when production levels are changed from one period to

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