Question: A retailer must decide whether to build a small or large facility at new location. Demand at the location can be either low or high,
A retailer must decide whether to build a small or large facility at new location. Demand at the location can be either low or high, with estimated probabilities to be and respectively. Plan production for a fourmonth period: February through May. For February and March, you should produce to exact demand forecast. For April and May, you should use overtime and inventory with a stable workforce; stable means that the number of workers needed for March will be held constant through May. However, government constraints put a maximum of hours of overtime labor per month in April and May zero overtime in February and March If demand exceeds supply, then backorders occur. Assume zero inventory on February There are workers on January You are given the following demand forecast: February ; March, ; April, ; May, The other relevant information is given below:
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