CHAPTER 4

THE ART OF MODELING WITH SPREADSHEETS

SOLUTION TO SOLVED PROBLEMS

4.S1 Production and Inventory Planning Model

Surfs Up produces high-end surfboards. Their production facility can produce at most 50 boards
per month. A challenge faced by Surfs Up is that their demand is highly seasonal. Demand
exceeds production capacity during the warm summer months, but is very low in the winter
months. To meet the high demand during the summer, Surfs Up typically produces more surf
boards than are needed in the winter months and then carries inventory into the summer months.
The production cost of a surfboard is $125. The boards are sold for $200. Because of storage
cost and the opportunity cost of capital, each board held in inventory from one month to the next
incurs a cost of $5 per board. Since demand is uncertain, Surfs Up would like to maintain an
ending inventory (safety stock) of at least 10 boards during the warm months (May–September)
and at least 5 boards during the other months (October–April). It is now the start of January
and Surfs Up has 5 boards in inventory. The forecast of demand over the next 12 months is
shown in the table below. Formulate and solve a linear programming model in a spreadsheet to
determine how many surfboards should be produced each month to maximize total profit.

Jan Feb Mar Apr May Jun July Aug Sep Oct Nov Dec
10 14 15 20 45 65 85 85 40 30 15 15

This is a dynamic problem with 12 time periods (months). The activities are the production
quantities in each of the 12 months.

1
To get started, we sketch a spreadsheet model. Each of the 12 months will be a separate column
in the spreadsheet. For each month, the production quantity (a changing cell) must be no more
than the maximum production quantity (50). Using on-hand inventory and current month
production, there will be a quantity of surf boards available for sale that must be greater than or
equal to the forecasted sales. The ending inventory at the end of each month must be at least the
minimum safety stock level. Each month will generate revenue, incur production costs and
inventory holding costs, and achieve a resulting profit. The goal will be to maximize the total
profit over all 12 months. This leads to the following sketch of a spreadsheet model.

Production Cost
Selling Price
Holding Cost
Starting Inventory

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Production
<=
Maximum

Available for Sale

>=
Forecasted Sales

Ending Inventory
>=
Safety Stock

Total
Revenue
Production Cost
Holding Cost
Profit

2
The amount available for sale will be the ending inventory from the previous month (or the
starting inventory for January) plus whatever is produced in that month. The ending inventory
will be the previous month’s ending inventory plus production minus sales. The revenue will
equal the selling price times forecasted sales. The production cost will be the production quantity
times the unit production cost. The holding cost will equal the ending inventory times the unit
holding cost. The monthly profit will be revenue minus production cost minus holding cost.
Finally, the total profit will be the sum of the monthly profits. Arbitrary production quantities of
25 each month leads to the following spreadsheet.

B C D E F G H I J K L M N O
3 Production Cost $125
4 Selling Price $200
5 Holding Cost $5
6 Starting Inventory 5
7
8 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
9 Production 25 25 25 25 25 25 25 25 25 25 25 25
10 <= <= <= <= <= <= <= <= <= <= <= <=
11 Maximum 50 50 50 50 50 50 50 50 50 50 50 50
12
13 Available for Sale 30 45 56 66 71 51 11 -49 -109 -124 -129 -119
14 >= >= >= >= >= >= >= >= >= >= >= >=
15 Forecasted Sales 10 14 15 20 45 65 85 85 40 30 15 15
16
17 Ending Inventory 20 31 41 46 26 -14 -74 -134 -149 -154 -144 -134
18 >= >= >= >= >= >= >= >= >= >= >= >=
19 Safety Stock 5 5 5 5 10 10 10 10 10 5 5 5
20
21 Total
22 Revenue $2,000 $2,800 $3,000 $4,000 $9,000 $13,000 $17,000 $17,000 $8,000 $6,000 $3,000 $3,000 $87,800
23 Production Cost $3,125 $3,125 $3,125 $3,125 $3,125 $3,125 $3,125 $3,125 $3,125 $3,125 $3,125 $3,125 $37,500
24 Holding Cost $100 $155 $205 $230 $130 -$70 -$370 -$670 -$745 -$770 -$720 -$670 -$3,195
25 Profit -$1,225 -$480 -$330 $645 $5,745 $9,945 $14,245 $14,545 $5,620 $3,645 $595 $545 $53,495

B C D EFGHIJKLM N O
3 Production Cost 125
4 Selling Price 200
5 Holding Cost 5
6 Starting Inventory 5
7
8 Jan Feb Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov Dec
9 Production 25 25 25
25
2525
25
25
25
25
25
25
10 <= <= <=
<=
<=
<=
<=<=
<=
<=
<= <=
11 Maximum 50 50 50
50
5050
50
50
50
50
50
50
12
13 Available for Sale =StartingInventory+Production =C17+Production =D17+Production
=E17+Production
=F17+Production
=G17+Production
=H17+Production
=I17+Production
=J17+Production
=K17+Production
=L17+Production
=M17+Production
14 >= >= >=
>=
>=
>=
>=
>=
>=
>=
>= >=
15 Forecasted Sales 10 14 15
20
45
65
85
85
40
30
15
15
16
17 Ending Inventory =AvailableForSale-ForecastedSales =AvailableForSale-ForecastedSales =AvailableForSale-ForecastedSales
=AvailableForSale-ForecastedSales
=AvailableForSale-ForecastedSales
=AvailableForSale-ForecastedSales
=AvailableForSale-ForecastedSales
=AvailableForSale-ForecastedSales
=AvailableForSale-ForecastedSales
=AvailableForSale-ForecastedSales
=AvailableForSale-ForecastedSales
=AvailableForSale-ForecastedSales
18 >= >= >=
>=
>=
>=
>=
>=
>=
>=
>= >=
19 Safety Stock 5 5 5510
10
10
10
10
555
20
21 Total
22 Revenue =SellingPrice*ForecastedSales =SellingPrice*ForecastedSales =SellingPrice*ForecastedSales
=SellingPrice*ForecastedSales
=SellingPrice*ForecastedSales
=SellingPrice*ForecastedSales
=SellingPrice*ForecastedSales
=SellingPrice*ForecastedSales
=SellingPrice*ForecastedSales
=SellingPrice*ForecastedSales
=SellingPrice*ForecastedSales
=SellingPrice*ForecastedSales =SUM(C22:N22)
23 Production Cost =ProductionCost*Production =ProductionCost*Production =ProductionCost*Production
=ProductionCost*Production
=ProductionCost*Production
=ProductionCost*Production
=ProductionCost*Production
=ProductionCost*Production
=ProductionCost*Production
=ProductionCost*Production
=ProductionCost*Production
=ProductionCost*Production =SUM(C23:N23)
24 Holding Cost =HoldingCost*EndingInventory =HoldingCost*EndingInventory =HoldingCost*EndingInventory
=HoldingCost*EndingInventory
=HoldingCost*EndingInventory
=HoldingCost*EndingInventory
=HoldingCost*EndingInventory
=HoldingCost*EndingInventory
=HoldingCost*EndingInventory
=HoldingCost*EndingInventory
=HoldingCost*EndingInventory
=HoldingCost*EndingInventory =SUM(C24:N24)
25 Profit =C22-C23-C24 =D22-D23-D24 =E22-E23-E24
=F22-F23-F24
=G22-G23-G24
=H22-H23-H24
=I22-I23-I24
=J22-J23-J24
=K22-K23-K24
=L22-L23-L24
=M22-M23-M24
=N22-N23-N24 =SUM(C25:N25)

3
The Solver information and solved spreadsheet are shown below.

B C D E F G H I J K L M N O
3 Production Cost $125
4 Selling Price $200
5 Holding Cost $5
6 Starting Inventory 5
7
8 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
9 Production 10 34 50 50 50 50 50 50 40 25 15 15
10 <= <= <= <= <= <= <= <= <= <= <= <=
11 Maximum 50 50 50 50 50 50 50 50 50 50 50 50
12
13 Available for Sale 15 39 75 110 140 145 130 95 50 35 20 20
14 >= >= >= >= >= >= >= >= >= >= >= >=
15 Forecasted Sales 10 14 15 20 45 65 85 85 40 30 15 15
16
17 Ending Inventory 5 25 60 90 95 80 45 10 10 5 5 5
18 >= >= >= >= >= >= >= >= >= >= >= >=
19 Safety Stock 5 5 5 5 10 10 10 10 10 5 5 5
20
21 Total
22 Revenue $2,000 $2,800 $3,000 $4,000 $9,000 $13,000 $17,000 $17,000 $8,000 $6,000 $3,000 $3,000 $87,800
23 Production Cost $1,250 $4,250 $6,250 $6,250 $6,250 $6,250 $6,250 $6,250 $5,000 $3,125 $1,875 $1,875 $54,875
24 Holding Cost $25 $125 $300 $450 $475 $400 $225 $50 $50 $25 $25 $25 $2,175
25 Profit $725 -$1,575 -$3,550 -$2,700 $2,275 $6,350 $10,525 $10,700 $2,950 $2,850 $1,100 $1,100 $30,750

Range Name Cells

AvailableForSale C13:N13
EndingInventory C17:N17
ForecastedSales C15:N15
HoldingCost C5
Maximum C11:N11
Production C9:N9
ProductionCost C3
SafetyStock C19:N19
SellingPrice C4
StartingInventory C6
TotalProfit O25

B C D EFGHIJKLM N O
3 Production Cost 125
4 Selling Price 200
5 Holding Cost 5
6 Starting Inventory 5
7
8 Jan Feb Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov Dec
9 Production 25 25 25
25
2525
25
25
25
25
25
25
10 <= <= <=
<=
<=
<=
<=<=
<=
<=
<= <=
11 Maximum 50 50 50
50
5050
50
50
50
50
50
50
12
13 Available for Sale =StartingInventory+Production =C17+Production =D17+Production
=E17+Production
=F17+Production
=G17+Production
=H17+Production
=I17+Production
=J17+Production
=K17+Production
=L17+Production
=M17+Production
14 >= >= >=
>=
>=
>=
>=
>=
>=
>=
>= >=
15 Forecasted Sales 10 14 15
20
45
65
85
85
40
30
15
15
16
17 Ending Inventory =AvailableForSale-ForecastedSales =AvailableForSale-ForecastedSales =AvailableForSale-ForecastedSales
=AvailableForSale-ForecastedSales
=AvailableForSale-ForecastedSales
=AvailableForSale-ForecastedSales
=AvailableForSale-ForecastedSales
=AvailableForSale-ForecastedSales
=AvailableForSale-ForecastedSales
=AvailableForSale-ForecastedSales
=AvailableForSale-ForecastedSales
=AvailableForSale-ForecastedSales
18 >= >= >=
>=
>=
>=
>=
>=
>=
>=
>= >=
19 Safety Stock 5 5 5510
10
10
10
10
555
20
21 Total
22 Revenue =SellingPrice*ForecastedSales =SellingPrice*ForecastedSales =SellingPrice*ForecastedSales
=SellingPrice*ForecastedSales
=SellingPrice*ForecastedSales
=SellingPrice*ForecastedSales
=SellingPrice*ForecastedSales
=SellingPrice*ForecastedSales
=SellingPrice*ForecastedSales
=SellingPrice*ForecastedSales
=SellingPrice*ForecastedSales
=SellingPrice*ForecastedSales =SUM(C22:N22)
23 Production Cost =ProductionCost*Production =ProductionCost*Production =ProductionCost*Production
=ProductionCost*Production
=ProductionCost*Production
=ProductionCost*Production
=ProductionCost*Production
=ProductionCost*Production
=ProductionCost*Production
=ProductionCost*Production
=ProductionCost*Production
=ProductionCost*Production =SUM(C23:N23)
24 Holding Cost =HoldingCost*EndingInventory =HoldingCost*EndingInventory =HoldingCost*EndingInventory
=HoldingCost*EndingInventory
=HoldingCost*EndingInventory
=HoldingCost*EndingInventory
=HoldingCost*EndingInventory
=HoldingCost*EndingInventory
=HoldingCost*EndingInventory
=HoldingCost*EndingInventory
=HoldingCost*EndingInventory
=HoldingCost*EndingInventory =SUM(C24:N24)
25 Profit =C22-C23-C24 =D22-D23-D24 =E22-E23-E24
=F22-F23-F24
=G22-G23-G24
=H22-H23-H24
=I22-I23-I24
=J22-J23-J24
=K22-K23-K24
=L22-L23-L24
=M22-M23-M24
=N22-N23-N24 =SUM(C25:N25)

The values in Production (C9:N9) show how many surf boards Surfs Up should produce each
month so as to achieve the maximum profit of $30,750.

4
4.S2 Aggregate Planning: Manpower Hiring/Firing/Training
Cool Power produces air conditioning units for large commercial properties. Due to the low
cost and efficiency of its products, the company has been growing from year to year. Also, due to
seasonality in construction and weather conditions, production requirements vary from month to
month. Cool Power currently has 10 fully trained employees working in manufacturing. Each
trained employee can work 160 hours per month and is paid a monthly wage of $4000. New
trainees can be hired at the beginning of any month. Due to their lack of initial skills and
required training, a new trainee only provides 100 hours of useful labor in their first month, but
are still paid a full monthly wage of $4000. Furthermore, because of required interviewing and
training, there is a $2500 hiring cost for each employee hired. After one month, a trainee is
considered fully trained. An employee can be fired at the beginning of any month, but must be
paid two weeks of severance pay ($2000). Over the next 12 months, Cool Power forecasts the
labor requirements shown in the table below. Since management anticipates higher
requirements next year, Cool Power would like to end the year with at least 12 fully trained
employees. How many trainees should be hired and/or workers fired in each month to meet the
labor requirements at the minimum possible cost? Formulate and solve a linear programming
spreadsheet model.

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

1600 2000 2000 2000 2800 3200 3600 3200 1600 1200 800 800

This is a dynamic problem with 12 time periods (months). The activities are the number of
workers to hire and fire in each of the 12 months.

5
To get started, we sketch a spreadsheet model. Each of the 12 months will be a separate column
in the spreadsheet. For each month, there are changing cells for both the number of workers
hired and fired. Based on the values of these changing cells, we can determine the number of
trainees and trained employees. The number of labor hours generated by the employees must be
at least the required labor hours each month. Finally, labor costs (for trainees and the trained
workforce), hiring cost, and severance pay leads to a total monthly cost. The goal will be to
minimize the total cost over all 12 months. This leads to the following sketch of a spreadsheet
model.

Labor Monthly Wage

Hiring Cost
Severance Pay
Labor Hours/Trainee/Month
Labor Hours/Trained Worker/Month
Starting Trained Workforce

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Workers Hired
Workers Fired Minimum to
Start the
Trainees Next Year
Trained Employees >=

Labor Hours Available

>=
Required Labor Hours

Total
Labor Cost (Trainees)
Labor Cost (Trained Workforce)
Hiring Cost
Severance Pay
Total Cost

6
When an employee is first hired, he or she is a trainee for one month before becoming a fully-
trained employee. Therefore, the number of trainees (row 14) is equal to the number of workers
hired in that month, while the number of trained employees (row 15) is the number of trained
employees and trainees from the previous month minus any employee that is fired. The labor
hours available in each month equals the sumproduct of the labor hours provided by each type of
worker (trained or trainees) with the number of each type of employee. The labor costs in each
month are the monthly wage multiplied by the number of employees. The hiring cost is the unit
hiring cost multiplied by the number of workers hired. The severance pay is the unit severance
cost multiplied by the number of workers fired. Then, the total monthly cost is the sum of the
labor costs, hiring cost, and severance pay. Finally, the total cost will be the sum of the monthly
costs. For arbitrary values of workers hired and fired each month, this leads to the following
spreadsheet.
B C D E F G H I J K L M N O P
3 Labor Monthly Wage $4,000
4 Hiring Cost $2,500
5 Severance Pay $2,000
6 Labor Hours/Trainee/Month 100
7 Labor Hours/Trained Worker/Month 160
8 Starting Trained Workforce 10
9
10 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
11 Workers Hired 2 2 2 2 2 2 2 0 0 0 2 2
12 Workers Fired 0 0 0 0 0 0 0 3 3 3 0 0 Minimum to
13 Start the
14 Trainees 2 2 2 2 2 2 2 0 0 0 2 2 Next Year
15 Trained Employees 10 12 14 16 18 20 22 21 18 15 15 17 >= 12
16
17 Labor Hours Available 1800 2120 2440 2760 3080 3400 3720 3360 2880 2400 2600 2920
18 >= >= >= >= >= >= >= >= >= >= >= >=
19 Required Labor Hours 1600 2000 2000 2000 2800 3200 3600 3200 1600 1200 800 800
20
21 Total
22 Labor Cost (Trainees) $8,000 $8,000 $8,000 $8,000 $8,000 $8,000 $8,000 $0 $0 $0 $8,000 $8,000 $72,000
23 Labor Cost (Trained Workforce) $40,000 $48,000 $56,000 $64,000 $72,000 $80,000 $88,000 $84,000 $72,000 $60,000 $60,000 $68,000 $792,000
24 Hiring Cost $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $0 $0 $0 $5,000 $5,000 $45,000
25 Severance Pay $0 $0 $0 $0 $0 $0 $0 $6,000 $6,000 $6,000 $0 $0 $18,000
26 Total Cost $53,000 $61,000 $69,000 $77,000 $85,000 $93,000 $101,000 $90,000 $78,000 $66,000 $73,000 $81,000 $927,000

B C DEFGHIJKLMN O P
3 Labor Monthly Wage 4000
4 Hiring Cost 2500
5 Severance Pay 2000
6 Labor Hours/Trainee/Month 100
7 Labor Hours/Trained Worker/Month 160
8 Starting Trained Workforce 10
9
10 Jan Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
11 Workers Hired 2 102430.999999999999998
0002.00000000006961
0
12 Workers Fired 0 000000310000 Minimum to
13 Start the
14 Trainees =WorkersHired =WorkersHired
=WorkersHired
=WorkersHired
=WorkersHired
=WorkersHired
=WorkersHired
=WorkersHired
=WorkersHired
=WorkersHired
=WorkersHired
=WorkersHired Next Year
15 Trained Employees =StartingTrainedWorkforce-WorkersFired =C15+C14-WorkersFired
=D15+D14-WorkersFired
=E15+E14-WorkersFired
=F15+F14-WorkersFired
=G15+G14-WorkersFired
=H15+H14-WorkersFired
=I15+I14-WorkersFired
=J15+J14-WorkersFired
=K15+K14-WorkersFired
=L15+L14-WorkersFired
=M15+M14-WorkersFired
>= 12
16
17 Labor Hours Available =SUMPRODUCT(LaborHoursPerTrainee:LaborHoursPerTrainedWorker,C14:C15) =SUMPRODUCT(LaborHoursPerTrainee:LaborHoursPerTrainedWork
=SUMPRODUCT(LaborHoursPerTrainee:LaborHoursPerTrainedWor
=SUMPRODUCT(LaborHoursPerTrainee:LaborHoursPerTrainedWo
=SUMPRODUCT(LaborHoursPerTrainee:LaborHoursPerTrainedWo
=SUMPRODUCT(LaborHoursPerTrainee:LaborHoursPerTrainedW
=SUMPRODUCT(LaborHoursPerTrainee:LaborHoursPerTrainedW
=SUMPRODUCT(LaborHoursPerTrainee:LaborHoursPerTrained
=SUMPRODUCT(LaborHoursPerTrainee:LaborHoursPerTraine
=SUMPRODUCT(LaborHoursPerTrainee:LaborHoursPerTrain
=SUMPRODUCT(LaborHoursPerTrainee:LaborHoursPerTrain
=SUMPRODUCT(LaborHoursPerTrainee:LaborHoursPerTra
18 >= >=
>=
>=
>=
>=
>=
>=
>=
>=
>=
>=
19 Required Labor Hours 1600 2000
2000
2000
2800
3200
3600
3200
1600
1200
800
800
20
21 Total
22 Labor Cost (Trainees) =LaborMonthlyWage*Trainees =LaborMonthlyWage*Trainees
=LaborMonthlyWage*Trainees
=LaborMonthlyWage*Trainees
=LaborMonthlyWage*Trainees
=LaborMonthlyWage*Trainees
=LaborMonthlyWage*Trainees
=LaborMonthlyWage*Trainees
=LaborMonthlyWage*Trainees
=LaborMonthlyWage*Trainees
=LaborMonthlyWage*Trainees
=LaborMonthlyWage*Trainees
=SUM(C22:N22)
23 Labor Cost (Trained Workforce) =LaborMonthlyWage*TrainedEmployees =LaborMonthlyWage*TrainedEmployees
=LaborMonthlyWage*TrainedEmployees
=LaborMonthlyWage*TrainedEmployees
=LaborMonthlyWage*TrainedEmployees
=LaborMonthlyWage*TrainedEmployees
=LaborMonthlyWage*TrainedEmployees
=LaborMonthlyWage*TrainedEmployees
=LaborMonthlyWage*TrainedEmployees
=LaborMonthlyWage*TrainedEmployees
=LaborMonthlyWage*TrainedEmployees
=LaborMonthlyWage*TrainedEmployees
=SUM(C23:N23)
24 Hiring Cost =HiringCost*WorkersHired =HiringCost*WorkersHired
=HiringCost*WorkersHired
=HiringCost*WorkersHired
=HiringCost*WorkersHired
=HiringCost*WorkersHired
=HiringCost*WorkersHired
=HiringCost*WorkersHired
=HiringCost*WorkersHired
=HiringCost*WorkersHired
=HiringCost*WorkersHired
=HiringCost*WorkersHired
=SUM(C24:N24)
25 Severance Pay =SeverancePay*WorkersFired =SeverancePay*WorkersFired
=SeverancePay*WorkersFired
=SeverancePay*WorkersFired
=SeverancePay*WorkersFired
=SeverancePay*WorkersFired
=SeverancePay*WorkersFired
=SeverancePay*WorkersFired
=SeverancePay*WorkersFired
=SeverancePay*WorkersFired
=SeverancePay*WorkersFired
=SeverancePay*WorkersFired
=SUM(C25:N25)
26 Total Cost =SUM(C22:C25) =SUM(D22:D25)
=SUM(E22:E25)
=SUM(F22:F25)
=SUM(G22:G25)
=SUM(H22:H25)
=SUM(I22:I25)
=SUM(J22:J25)
=SUM(K22:K25)
=SUM(L22:L25)
=SUM(M22:M25)
=SUM(N22:N25)
=SUM(C26:N26)

7
The Solver information is shown below, followed by the solved spreadsheet.
B C D E F G H I J K L M N O P
3 Labor Monthly Wage $4,000
4 Hiring Cost $2,500
5 Severance Pay $2,000
6 Labor Hours/Trainee/Month 100
7 Labor Hours/Trained Worker/Month 160
8 Starting Trained Workforce 10
9
10 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
11 Workers Hired 2.1E-11 4 0 0 6 2 1 0 0 0 2 0
12 Workers Fired 0 0 0 0 0 0 0 3 10 0 0 0 Minimum to
13 Start the
14 Trainees 2.1E-11 4 0 0 6 2 1 0 0 0 2 0 Next Year
15 Trained Employees 10 10 14 14 14 20 22 20 10 10 10 12 >= 12
16
17 Labor Hours Available 1600 2000 2240 2240 2840 3400 3620 3200 1600 1600 1800 1920
18 >= >= >= >= >= >= >= >= >= >= >= >=
19 Required Labor Hours 1600 2000 2000 2000 2800 3200 3600 3200 1600 1200 800 800
20
21 Total
22 Labor Cost (Trainees) $0 $16,000 $0 $0 $24,000 $8,000 $4,000 $0 $0 $0 $8,000 $0 $60,000
23 Labor Cost (Trained Workforce) $40,000 $40,000 $56,000 $56,000 $56,000 $80,000 $88,000 $80,000 $40,000 $40,000 $40,000 $48,000 $664,000
24 Hiring Cost $0 $10,000 $0 $0 $15,000 $5,000 $2,500 $0 $0 $0 $5,000 $0 $37,500
25 Severance Pay $0 $0 $0 $0 $0 $0 $0 $6,000 $20,000 $0 $0 $0 $26,000
26 Total Cost $40,000 $66,000 $56,000 $56,000 $95,000 $93,000 $94,500 $86,000 $60,000 $40,000 $53,000 $48,000 $787,500

Range Name Cells

HiringCost C4
LaborHoursAvailable C17:N17
LaborHoursPerTrainedWorker C7
LaborHoursPerTrainee C6
LaborMonthlyWage C3
MinimumToStartNextYear P15
RequiredLaborHours C19:N19
SeverancePay C5
StartingTrainedWorkforce C8
TotalCost O26
TrainedEmployees C15:N15
Trainees C14:N14
WorkersFired C12:N12
WorkersHired C11:N11

B C DEFGHIJKLMN O P
3 Labor Monthly Wage 4000
4 Hiring Cost 2500
5 Severance Pay 2000
6 Labor Hours/Trainee/Month 100
7 Labor Hours/Trained Worker/Month 160
8 Starting Trained Workforce 10
9
10 Jan Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
11 Workers Hired 2 102430.999999999999998
0002.00000000006961
0
12 Workers Fired 0 000000310000 Minimum to
13 Start the
14 Trainees =WorkersHired =WorkersHired
=WorkersHired
=WorkersHired
=WorkersHired
=WorkersHired
=WorkersHired
=WorkersHired
=WorkersHired
=WorkersHired
=WorkersHired
=WorkersHired Next Year
15 Trained Employees =StartingTrainedWorkforce-WorkersFired =C15+C14-WorkersFired
=D15+D14-WorkersFired
=E15+E14-WorkersFired
=F15+F14-WorkersFired
=G15+G14-WorkersFired
=H15+H14-WorkersFired
=I15+I14-WorkersFired
=J15+J14-WorkersFired
=K15+K14-WorkersFired
=L15+L14-WorkersFired
=M15+M14-WorkersFired
>= 12
16
17 Labor Hours Available =SUMPRODUCT(LaborHoursPerTrainee:LaborHoursPerTrainedWorker,C14:C15) =SUMPRODUCT(LaborHoursPerTrainee:LaborHoursPerTrainedWork
=SUMPRODUCT(LaborHoursPerTrainee:LaborHoursPerTrainedWor
=SUMPRODUCT(LaborHoursPerTrainee:LaborHoursPerTrainedWo
=SUMPRODUCT(LaborHoursPerTrainee:LaborHoursPerTrainedWo
=SUMPRODUCT(LaborHoursPerTrainee:LaborHoursPerTrainedW
=SUMPRODUCT(LaborHoursPerTrainee:LaborHoursPerTrainedW
=SUMPRODUCT(LaborHoursPerTrainee:LaborHoursPerTrained
=SUMPRODUCT(LaborHoursPerTrainee:LaborHoursPerTraine
=SUMPRODUCT(LaborHoursPerTrainee:LaborHoursPerTrain
=SUMPRODUCT(LaborHoursPerTrainee:LaborHoursPerTrain
=SUMPRODUCT(LaborHoursPerTrainee:LaborHoursPerTra
18 >= >=
>=
>=
>=
>=
>=
>=
>=
>=
>=
>=
19 Required Labor Hours 1600 2000
2000
2000
2800
3200
3600
3200
1600
1200
800
800
20
21 Total
22 Labor Cost (Trainees) =LaborMonthlyWage*Trainees =LaborMonthlyWage*Trainees
=LaborMonthlyWage*Trainees
=LaborMonthlyWage*Trainees
=LaborMonthlyWage*Trainees
=LaborMonthlyWage*Trainees
=LaborMonthlyWage*Trainees
=LaborMonthlyWage*Trainees
=LaborMonthlyWage*Trainees
=LaborMonthlyWage*Trainees
=LaborMonthlyWage*Trainees
=LaborMonthlyWage*Trainees
=SUM(C22:N22)
23 Labor Cost (Trained Workforce) =LaborMonthlyWage*TrainedEmployees =LaborMonthlyWage*TrainedEmployees
=LaborMonthlyWage*TrainedEmployees
=LaborMonthlyWage*TrainedEmployees
=LaborMonthlyWage*TrainedEmployees
=LaborMonthlyWage*TrainedEmployees
=LaborMonthlyWage*TrainedEmployees
=LaborMonthlyWage*TrainedEmployees
=LaborMonthlyWage*TrainedEmployees
=LaborMonthlyWage*TrainedEmployees
=LaborMonthlyWage*TrainedEmployees
=LaborMonthlyWage*TrainedEmployees
=SUM(C23:N23)
24 Hiring Cost =HiringCost*WorkersHired =HiringCost*WorkersHired
=HiringCost*WorkersHired
=HiringCost*WorkersHired
=HiringCost*WorkersHired
=HiringCost*WorkersHired
=HiringCost*WorkersHired
=HiringCost*WorkersHired
=HiringCost*WorkersHired
=HiringCost*WorkersHired
=HiringCost*WorkersHired
=HiringCost*WorkersHired
=SUM(C24:N24)
25 Severance Pay =SeverancePay*WorkersFired =SeverancePay*WorkersFired
=SeverancePay*WorkersFired
=SeverancePay*WorkersFired
=SeverancePay*WorkersFired
=SeverancePay*WorkersFired
=SeverancePay*WorkersFired
=SeverancePay*WorkersFired
=SeverancePay*WorkersFired
=SeverancePay*WorkersFired
=SeverancePay*WorkersFired
=SeverancePay*WorkersFired
=SUM(C25:N25)
26 Total Cost =SUM(C22:C25) =SUM(D22:D25)
=SUM(E22:E25)
=SUM(F22:F25)
=SUM(G22:G25)
=SUM(H22:H25)
=SUM(I22:I25)
=SUM(J22:J25)
=SUM(K22:K25)
=SUM(L22:L25)
=SUM(M22:M25)
=SUM(N22:N25)
=SUM(C26:N26)

Thus, WorkersHired (C11:N11) shows the number of workers Cool Power should hire each
month and WorkersFired (C12:N12) shows the number of workers Cool Power should fire each
month so as to achieve the minimum TotalCost (O26) of $787,500.