Production Planning Optimization in Excel Solver | Linear Programming for Cost Minimization
This video provides a complete step-by-step guide to solving a Production Planning Optimization Problem using Linear Programming (LP) and Excel Solver. The objective is to minimize total production cost across a multi-period planning horizon by considering:
Regular time production cost
Overtime production cost
Inventory holding cost
The instructor demonstrates how to define the key decision variables, including:
Regular production quantity
Overtime production quantity
End-of-month inventory levels
The tutorial explains how to apply two essential constraint types:
Inventory balancing constraints (demand satisfaction)
Capacity constraints (regular and overtime limits)
Finally, Excel Solver is used to compute the optimal production schedule, minimizing cost while meeting all monthly demands.
📌 What You Will Learn
✔ How to formulate a multi-period production planning LP model
✔ How to set up regular, overtime, and inventory decision variables
✔ How to build the objective function using SUMPRODUCT
✔ Inventory balance and production capacity constraints
✔ How to run Excel Solver for optimization
✔ How to extract and interpret the Solver Answer Report
This video demonstrates how to solve the Dynamic Lot-Sizing Problem using Excel Solver, including MILP setup, binary ordering variables, inventory constraints, and multi-period cost minimization.