The Bi-Product Company produces two products (A and B) that are similar in terms of labor content and skills required. Company management wishes to “level” the number of employees needed each day so no hiring or layoffs will be required during the year. A complication to this problem is that the number of working days in each quarter varies.

Demand
Quarter Product A Product B	Working Days
1 9,800 14,500	68
2 12,000 30,000	56
3 14,000 19,500	62
4 31,000 25,000	58
Beginning inventory: 2,400 units of Product A
900 units of Product B
Inventory holding cost: $10 per unit per quarter (either product)
No back orders allowed
No variations in size of workforce allowed
Output rate = 25 units of either product per day per employee

a. What daily production rate will be required to meet the demand forecast and yield zero inventory at the end of quarter 4?

b. How many employees will be required each day? What are the inventory levels each quarter?

Answer rating: 100% (QA)

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