Calculate the annual cost for a firm whose demand forecast

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Develop a production plan and calculate the annual cost for a firm whose demand forecast is fall, 10,700; winter, 8,300; spring, 6,900; summer, 12,700. Inventory at the beginning of fall is 535 units. At the beginning of fall, you have 35 workers. It is not possible to hire any additional workers until next Summer, at which time temporary workers will be hired at the beginning of Summer and laid off at the end of Summer. Therefore, no hiring or laying off is possible in the Fall, Winter or Spring. In addition, you have negotiated with the union an option to use the regular workforce on overtime during winter or spring only 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; layoff, $220 for each worker laid off; inventory holding, $5 per unit-quarter; backorder, $10 per unit; straight time, $5 per hour; overtime, $8 per hour. Assume that the productivity is 0.5 unit per worker hour, with eight hours per day and 60 days per season.

Reference no: EM131035071

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