Question: Develop a production plan and calculate the annual cost for a firm whose demand forecast is 22,100 units for the fall, 19,300 units for the
Develop a production plan and calculate the annual cost for a firm whose demand forecast is 22,100 units for the fall, 19,300 units for the winter, 16,400 units for the spring, and 12,700 units for the summer. Inventory at the beginning of the fall is 575 units. At the beginning of the fall, you currently have 45 workers. Still, you plan to hire temporary paid interns at the beginning of summer (and lay them off at the end of summer). In addition, you have negotiated with the union an option to use the regular workforce on overtime during winter or spring if overtime is necessary to prevent stockouts at the end of those quarters. Overtime is not available during the fall. Relevant costs are hiring $110 for each temp; $220 for each worker laid-off; $5 for inventory holding per unit-quarter; $10 backorder per unit; $5 hour for straight time; and $8 hour for overtime. Assume that the productivity is 0.5 units per worker hour, with 8 hours per day and 60 days per season. Be sure to show the overall annual cost of your plan and how many temporary workers need to be hired.
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