Question

Question 1

Towers Industries Co. produces a vast range of screws. The company is introducing five new products for its consumer market. A twinfast screw (SKU XT175) is a type of screw that can be driven twice as fast as a normal screw with the same pitch. A wood screw (SKU OH624) is a screw with a sharp point designed to attach two pieces of wood together. A security screw (SKU HV502) is a type of screw whose head is impossible to reverse. A machine screw (SKU BF156) is a type of screw that is used in machining applications. Finally, a sheet metal screw (SKU DG085), which is designed to be driven into sheet metal.

The company's production manager, Goldie Williams, is planning the production scheduling of these five products on three machines. Each product can be manufactured on any of these machines. The unit production costs (in $) are shown below:

	Product
Machine	SKU XT175	SKU OH624	SKU HV502	SKU BF156	SKU DG085
Machine 1	4.9	6.1	7.9	11.0	6.6
Machine 2	15.4	8.6	11.9	10.3	12.5
Machine 3	8.4	12.4	8.2	11.7	8.4

Goldie needs to meet exactly the demand. She is not allowed to produce more and keep those extra units in inventory. The demand for each of the screws is shown below:

• SKU XT175: 2770 units
• SKU OH624: 1190 units
• SKU HV502: 2540 units
• SKU BF156: 570 units
• SKU DG085: 1950 units

The available capacity is listed below:

• Machine 1: 4008 units
• Machine 2: 6012 units
• Machine 3: 2004 units

The production manager noticed that her mathematical model does not include the setup cost to run the machines. The setup cost is $ 10,000 per machine. If a machine is producing any screws types, it incurs a $10000 fixed cost.

What is the optimal total cost (setup cost + production cost)?

Answer 1