Compute annual cost for a company whose demand forecast fall

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Q. Develop a production plan and compute the annual cost for a company whose demand forecast is fall, 10,000; winter, 8,000; spring, 7,000; summer, 12,000. Inventory at the beginning of fall is 500 units. At the beginning of fall you currently have 30 workers but you plan to hire temporary workers at the beginning of summer and lay them off at the end of the 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 stock-outs at the end of those quarters. Overtime is not available during the fall. Relevant costs are: hiring, $100 for each temp; layoff, $200 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 units per worker hour, with eight hours per day and 60 days per season.

Reference no: EM13106701

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