A manufacturerof roofing supplies has developed monthly forecasts for a family of products. Data for the 6-month period from
January to June are presented below
Month Expected demand Production days Demand per day
Jan. 900 22 41
Feb. 700 18 39
Mar. 800 21 38
Apr. 1200 21 57
May 1500 22 68
Jun. 1100 20 55
Cost information for the production is as below:
Inventory carrying cost $ 5 per unit per month
Average pay rate $ 10 per hour ($ 80 per day)
Labor-hours to produce a unit 1.6 hours per unit
Cost of increasing daily production rate $ 300 per unit
Cost of decreasing daily production rate $ 600 per unit
Assume we are varying the workforce size by hiring and layoffs as necessary, the production rate will equal the demand. Calculate the total cost of this production plan.