Problem: Managing inventory across multiple periods to minimise holding costs while maintaining sufficient stock.
What if your product is made from materials
that are in limited supply and require special or expensive storage facilities? In such a
situation, you have to keep purchasing and inventory costs down, but still keep enough
stock to meet demand. If you use perishable resources or materials subject to supply
limitations, you may encounter problems like this one.
You know the unit demand for each of the thirteen time periods. For instance, the demand
for time period 1 must be met by using some combination of sources 1, 2, and 3. The ending
inventory is equal to starting inventory plus the sum of amounts purchased from each
source less the unit demand.
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