Reference no: EM13382223

Develop a production plan and calculate the annual cost for a firm 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 summer. 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, $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 unit per worker hour, with eight hours per day and 60 days per season
Fall Winter Spring Summer
Forecast 10,000 8,000 7,000 12,000
Beginning inventory

Production required

Production hours required

Production hours available

Overtime hours

Temp workers

Temp worker hours available

Total hours available

Actual production

Ending inventory

Workers hired

Workers laid off

Fall Winter Spring Summer
Straight time $
$
$
$

Overtime

Inventory

Backorder

Hiring

Layoff

________________________________________

________________________________________
Total $
$
$
$

_______________________________________
Annual cost $