(Wagner–Whitin for Aircraft Engines) The Pratt & Whitin Company, which manufactures aircraft engines, needs to decide how many units of a particular bolt to order in order to build engines over the...

(Wagner–Whitin for Aircraft Engines) The Pratt & Whitin Company, which

manufactures aircraft engines, needs to decide how many units of a particular bolt to order

in order to build engines over the next 4 months. Orders for engines are placed over a year

in advance, so the company knows its near-term demand exactly; in particular, the number

of engines to produce in the next 4 months will be 150, 100, 80, and 200 in months 1

through 4, respectively. Each engine requires a single bolt. Orders for bolts incur a fixed

cost of $120, and bolts held in inventory incur a holding cost of $0.80 per bolt per month.

Find the optimal order quantities in each period and the optimal total cost.

Aug 29, 2022

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