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GECO is contracted for the next 4 years to supply aircraft engines at the rate of four engines a year. Available production capacity and production...
GECO is contracted for the next 4 years to supply aircraft engines at the rate of four engines a year. Available production capacity and production costs vary from year to year. GECO can produce five engines in year 1, six in year 2, three in year 3, and five in year 4. The corresponding production costs per engine over the next 4 years are $300,000, $330,000, $350,000, and $420,000, respectively. GECO can elect to produce more than it needs in a certain year, in which case the engines must be properly stored until shipment date. The storage cost per engine also varies from year to year, and is estimated to be $20,000 for year 1, $30,000 for year 2, $40,000 for year 3, and $50,000 for year 4. Currently, at the start of year 1, GECO has one engine ready for shipping. Develop an optimal production plan for GECO.
