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The Silver Star Bicycle Company will be manufacturing both men's and women's models for its Easy Pedal 10-speed bicycles during the next two months. Management wants to develop a production schedule indicating how many bicycles of each model should be produced in each month. Current demand forecasts call for 150 men's and 125 women's models to be shipped during the first month and 200 men's and 150 women's models to be shipped during the second month. Additional data are shown.
Model
Production Costs
Labor Requirements (hours)
Current Inventory
Men's
$40
manufacture(10) assmebly(3)
20
Women's
$30
manufacture(8) assembly(2)
30
Last month the company used a total of 4000 hours of labor. The company's labor relations policy will not allow the total hours of labor to increase or decrease by more than 500 hours from month to month, i.e. labor usage should follow a smooth pattern between consecutive months. In addition, the company charges monthly inventory at the rate of 2% of the production cost based on the inventory levels at the end of the month. The company would like to have at least 25 units of each model in inventory at the end of the two months.
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