Example

C11 = $40.00
C24 = $40.00 + ($50 + $50) = $41.00
C41 = $40.00 + ($2.00 + $2.00 + $2.00) = $46.00

The optimal solution is summarized in Figure 5.3. The dashed lines

indicate back-ordering, the dotted lines indicate production for a future
period, and the solid lines show production in a period for itself.
Example 5.2-2 (Equipment Maintenance)
Arkansas Pacific operates a medium-zised sawmill. The mill prepares
different types o that range from soft pine to hard oak according to a weakly
schedule. Depending on the type of wood being milled, the demand for
sharp blades varies from day to day according to the following 1-week (7-
day) data :
Day Mon. Tue. Wed. Thu. Fri. Sat. Sun.

Demand (blades) 24 12 14 20 18 14 22

1. Buy new blades at the cost of $12 a blade.

2. Use an overnight sharpening service at the cost of $6 a blade, or a slow
2-day service at the cost of $3 a blade.
The situation can be represented as a transportation model with eight
sources and seven destinations. The destinations represent the 7 days of the
week. The sources of the model aredefined as follows : Source 1 corresponds
to buying new blades, which, in the extreme case, could provide sufficient
supply to cover the demand for all 7 day. Sources 2 to 8 correspond to the 7
days of the week. The amount of supply for each of these sources equals the
number of used blades at the end of the associated day. For example,
sources 2 (i.e., Monday) will have a supply of used blades equal to the
demand for Monday. The unit transportation cost for the model is $12, $6,
$3, depending on wheater the blade is supplied from new blades, overnight
sharpening, or 2-day sharpening. Notice that the overnight service means
that used blades sent at the end of day i will be in used at the start of day i +
1 or day i + 2. The 2-day service means that used blades sent at the end of
day i will be in use at the start of day i + 3 pr any day there after. The
disposal column is a dummy destination that receives the blades left
unsharpened at the end of the day. The complete model is given in Table
5.13
 1 2 3 4 5 6 7 8
mon tue Wed Thu Fri Sat Sun Disposal
1-New
Table 5.13
$12 $12 $12 $12 $12 $12 $12 $0 124

24 2 98
2-Mon M $6 $6 $3 $3 $3 $3 $0 24

10 8 6
3-Tue M M $6 $6 $3 $3 $3 $0 12

6 6
4-Wed M M M $6 $6 $3 $3 $0 14

14
5-Thu M M M M $6 $6 $3 $0 20

12 8
6-Fri M M M M M $6 $6 $0 18

14 4
7-Sat M M M M M M $6 $0 14
The optimum solution (obtained by TORA, file ch5ToraEquipMaintEx5-2-2.txt) is summarized as follows:

Sharpening service
Period New Blades Overnight 2-day Disposal
Mon. 24(Mon.) 10(Tue.) + 8 (Wed.) 6(Thu.) 0
Tue. 2(Tue.) 6 (Wed.) 6(Fri.) 0
Wed. 0 14(Thu.) 0 0
Thu. 0 12(Fri.) 8(Sun.) 0
Fri. 0 14(Sat.) 0 4
Sat. 0 14(Sun.) 0 0
Sun. 0 0 0 22
Total cost = $840

Observe the interpretation of the solution. At the start of Monday. Arkansas Pacific buys 24 new blades. At the
end of the sameday, the company will have 24used blades. 18 of which are sent to overnight service and 6 to
2-day service. Of the 18 overnight blades, 10 will be used on Tuesday and 8 on Wednesday. The six 2-days
blades will beused on Thursday. The rest of the tableau is interpretedsi similarly. The disposal column shows
the number of used blades that will be left unsharpened at the end of a given day.