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 $