Productivity 0.

5 Backorder cost 10 $ per unit

Time in a day 8 hrs Hiring cost 100 $ per worker
Days in season 60 Layoff cost 200 $ per worker
Inventory holding 5 $ per unit-quarter
Labor Straight 5 $ per hour
Overtime 8 $ per hour
Production Plan

Demand Beginning Closing Units to be Labor hours

Season Forecast Invetory Inventory produced required Workers
Fall 10000 500 0 9500 19000 30
Winter 8000 0 0 8000 16000 30
Spring 7000 0 200 7000 14000 30
Summer 12000 200 400 11800 23600 50

Closing Inventory Production - Units to be produced

Beginning Inventory Previous month Closing Inventory
Units to be produced Demand forecast - beginning Inventory
Labour Hours Required Units to be produced/productivity
Workers are fixed for three season except for Summer where Labour Hours required/ time in a day
Total units Production + Beginning Inventory
Backorders Demand not fulfilled
Labor Cost Overtime cost + Straight time cost
 shortage for Straight Overtime Overtime Total
Production Total units overtime Backorders time cost Hours cost labor cost
7200 7700 2300 72000 0 0 72000
7200 7200 800 0 72000 1600 12800 84800
7200 7200 0 0 72000 0 0 72000
12000 12200 0 0 120000 0 0 120000

required/ time in a day * days in season (Rounded to nearest integer)

Inventory Backorder Workers Workers Hiring Layoff
cost cost hired laid-off cost cost Total cost
1250 23000 0 0 0 0 96250
0 0 0 0 0 0 84800
0 0 0 0 0 0 72000
500 0 20 20 2000 4000 126500
Total cost of all season: $379,550.00
 A. For February and March, you should produce to exact demand forecast.
B. For April and May, you should use overtime and inventory with a stable workforce; stable means that
number of workers needed for March will be held constant through May. However, government
constraints put a maximum of 5,000 hours of overtime labor per month in April and May (zero overtime
Given February and March).
C. If demand exceeds supply, then backorders occur.
D. There are 100 workers on January 31.
E. You are given the following demand forecast: February, 80,000; March, 64,000; April, 100,000; May,
40,000.
F. Productivity is four units per worker hour, eight hours per day, 20 days per month.
G. Assume zero inventory on February 1.
H. Costs are hiring, $50 per new worker; layoff, $70 per worker laid off; inventory holding, $10 per unitm

Month Demand Number of Workers Hired Fired Regular Production

January 100
February 80000 125 25 0 80000
March 64000 100 0 25 64000
April 100000 100 0 0 64000
May 40000 100 0 0 64000
Total 425 25 25 272000
Unit Cost 50 70 10
Cost $ 1,250.00 $ 1,750.00 $ 680,000.00

Total $
ecast.
able workforce; stable means that the
May. However, government
th in April and May (zero overtime in

rch, 64,000; April, 100,000; May,

ays per month.

ff; inventory holding, $10 per unitmonth; straight-time labor, $10 per hour; overtime, $15 per hour; backorder, $20 per unit.

Overtime Production Total Production Inventory Backorder

0 80000 0 0
0 64000 0 0
20000 84000 0 16000
0 64000 24000 0
20000 24000 16000
15 10 20
$ 75,000.00 $ 240,000.00 $ 320,000.00

1,318,000.00
0 per unit.