Question

This problem is an extension of our example covered in class on April 20. This involves Mondo Motorcycles. Suppose that Mondo no longer must meet demands on time. For each quarter that demand for a motorcycle is unmet, a penalty or shortage cost of $120 per motorcycle short is accessed. Thus, demand can now be backlogged. All demands must be met however, by the end of quarter 4. Modify the formulation of the Mondo problem to allow for backlogged demand.

(Hint: Unmet demand corresponds to i_t?0. Thus i_t is urs, and we must substitute

        i_t =i'_t - i''_t. Now i''_t will be the amount of demand unmet at the end of quarter t.)

Answer 1