Question

Plan production for a four-month period: February through May. For February and March, you should produce to exact demand forecast. For April and May, you should use overtime and inventory with a stable workforce; stable means that the number of workers needed for March will be held constant through May. However, government constraints put a maximum of 5,000 hours of overtime labor per month in April and May (zero overtime in February and March). If demand exceeds supply, then backorders occur. There are 100 workers on January 31. You are given the following demand forecast: February, 80,000; March, 64,000; April, 100,000; May, 40,000. Productivity is four units per worker hour, eight hours per day, 20 days per month. Assume zero inventory on February 1. Costs are hiring, $50 per new worker; layoff, $70 per worker laid off; inventory holding, $10 per unit-month; straight-time labor, $10 per hour; overtime, $15 per hour; backorder, $20 per unit. Develop a production plan and calculate the total cost of this plan. Note: Assume any layoffs occur at beginning of next month. (Leave no cells blank - be certain to enter "0" wherever required. Negative values should be indicated by a minus sign. Round your answers to the nearest whole number.) February March April May Forecast 80,000 64,000 100,000 40,000 Beginning inventory Production required Production hours required Regular workforce Regular production Overtime hours Overtime production Total production Ending inventory Ending backorders Workers hired Workers laid off February March April May Straight time $ $ $ $ Overtime Inventory Backorder Hiring Layoff Total $ $ $ $ Total cost $

Answer 1

	February	March	April	may
Forecast	80000	64000	100000	40000
Beginning inventory	0	-16000	-16000	-32000
Production required	80000	80000	116000	72000
Production hours required	20000	20000	29000	18000
Regular workforce	100	100	100	100
Regular production	64000	64000	64000	64000
Overtime hours	0	0	5000	2000
Overtime production	0	0	20000	8000
Total production	64000	64000	84000	72000
Ending inventory	0	0	0	0
Ending backorders	16000	16000	32000	0
Workers hired	0	0	0	0
Workers laid off	0	0	0	0
Straight time	160000	160000	160000	160000
Overtime	0	0	75000	30000
Inventory	0	0	0	0
Backorder	320000	320000	64000	0
Hiring	0	0	0	0
Layoff	0	0	0	0
Total	0	0	0	0
Total cost	480000	480000	299000	190000