A company produces heaters. Demand during each of the next 12 months is forecasted as shown below.
Question:
A company produces heaters. Demand during each of the next 12 months is forecasted as shown below. Other relevant information is as follows:
* Workers are paid $5000 per month.
* It costs $500 to hold a heater in inventory for a month. The holding cost is based on each month's ending inventory.
* It costs $4000 to hire a worker.
* It costs $20,000 to fire a worker.
* Each worker can make up to 8 heaters a month.
* At the beginning of month 1 there are 500 heaters in inventory and 60 workers.
This information is summarized below.
Workers are hired and fired at beginning of each month which determines how the number of units that can be produced each month. Assume workers are hired and fired at the beginning of each month. How can the company minimize the cost of meeting demand for heaters on time?
| 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 | 12 | |
| Demand | 945 | 791 | 364 | 725 | 268 | 132 | 160 | 304 | 989 | 293 | 279 | 794 |
| Pay | $5,000 | per month |
| HoldCost | $500 | per EI heater |
| Hire | $4,000 | per worker |
| Fire | $20,000 | per worker |
| Productivity | 8 | heaters/month |
| Beg Inv | 500 | heaters |
| Workers(T=0) | 60 | Workers |
Expert Answer:
Albebraic formulation and solution of the problem using Excel Solver is given below Decision Variabl... View the full answer
