DAT, Inc. needs to develop an aggregate plan for its product line. Its relevant data is given below:
Production Time 1 hr/unit Beginning Inventory 500 units
Std Labor Cost $10/hr Safety Stock 1000 units
Overtime 150%
Workweek 5 days, 8 hrs/day Shortage Cost $20/unit/month
Days/Month 20 Carrying Cost $5/unit/month
Demand forecast is given in the table below:
Month Demand (units)
January 2500
February 3000
March 4000
April 3500
May 3500
June 3000
July 3000
August 4000
September 4000
October 4000
November 3000
December 3000
If management wants a constant workforce and to limit overtime to 10 hrs/employee/week, determine the level of employment which minimizes cost
Make any necessary assumptions.