Your firm manufactures Bluetooth headphones. Its demand forecasts for 2021 are as follows:

Month	Demand
Jan	140,000
Feb	78,900
Mar	85,800
Apr	89,100
May	123,600
Jun	136,350
Jul	120,450
Aug	106,950
Sep	121,950
Oct	135,750
Nov	87,000
Dec	93,300

Each worker can produce 900 products per month and is paid $1500 per month. Assume that at the end of December 2020, the company has 100 employees working on the production line. Hiring and layoff (firing) decisions are made at the beginning of each month, and associated costs are charged at that time. It costs the company $400 to hire and $800 to lay off a worker. A new hire produces the products at the same rate as an experienced worker. Workers do not work overtime.

The company incurs holding cost for the amount of ending inventory in each month, and incurs backorder cost at the end of each month for any unfilled orders. The company incurs $4 per unit backorder and $2 per month for holding one unit in inventory. All backorders must be fulfilled no later than the end of December 2021.

1. Under the level production plan, what is the total cost?

Answer rating: 100% (QA)

SOLUTION 1 Calculate monthly demand and production requirements Given monthly demands total ... View the full answer