Case Problem PM COMPUTER SERVICES In the past, PM has met its demand strictly from regu- lar and overtime production. To meet demand in some Paulette Smith and Maureen Becker are seniors in engi- months when it did not have sufficient regular and over- time production, the company would plan ahead and pro- neering and business, respectively, at State University. duce computers in previous months with available They have set up a company, PM Computer Services, to capacity. However, Paulette and Maureen's apartment was assemble and sell their own brand of personal computers. completely filled with components and workspace, so they They buy component parts on the open market from a vari- could not store completed computers. Instead, they leased ety of sources in the United States and overseas, and they warehouse space in town to store their completed comput- assemble their computers, mostly at night, in their three- ers for delivery in future months. They had to transport the bedroom apartment. They sell their computers primarily to computers across town to the warehouse and pay for all departments at State University and to other students. They handling; also, the warehouse had to be climate controlled. hire other students to perform the assembly operations The cost of holding a computer in storage at the warehouse and to test and package the computers. In addition to man- is $15 per month aging the operations, Paulette and Maureen help with all Paulette and Maureen are considering an alternative other tasks, including sales and accounting. production strategy wherein they would hire new workers They pay the students who work for them $8 per hour on a monthly basis as needed and lay off workers when for a 40-hour week, or $1,280 per month. They hire students they are not needed. They estimate the cost of hiring new on a monthly basis, and their delivery schedule is also on a workers to be $200, primarily for related paperwork and monthly (i.e., end-of-the-month) basis. PM currently has training. The cost of laying off a worker is $320, or ap- five employees. PM Computers has determined that each of proximately 1 week's wages. They may want to rehire its employees is able to produce 12.7 computers, on average, some of the workers they lay off at a later date, so they per month. When the monthly demand for its computers ex- want them to leave with a good feeling about PM. ceeds its regular production capacity, PM employs limited Determine a planning schedule for PM Computer overtime. Each computer produced on an overtime basis Services, indicating the number of employees working adds $12 to the labor cost of a computer. A PM employee each month, including the number hired and the number can produce 0.6 computer per month on an overtime basis. laid off, the number of computers produced each month Paulette and Maureen have received the following in both regular time and overtime, and the number of computer orders for the next 6 months: computers carried over in inventory each month. There should be no inventory left over after month 6. Provide Month i Computer Orders integer solution values for these different variables. Com- pare this solution with the one you would obtain without 63 integer restrictions 74 3 95 57 5 0 4 68 86