2. A bicycle company has the following projected sales demand for the next 9 months (assume each month has the same number of production days):
|
Month
|
Demand
|
|
1
|
2,400
|
|
2
|
3,600
|
|
3
|
3,000
|
|
4
|
3,800
|
|
5
|
4,000
|
|
6
|
3,500
|
|
7
|
2,800
|
|
8
|
3,300
|
|
9
|
3,000
|
Inventory costs them $20 per month per bike, and any shortage costs them $200 in lost profit. It costs $900 to produce a bike. They currently have 26 workers, each capable of producing 105 bikes per month. The workers can produce 20 extra bikes per month on overtime, but it costs an additional $30 in overtime cost per bike produced in overtime. (0.4 points)
a. Write the objective and constraints equations
b. Compute the cost of using overtime and inventory production without shortages. Can they accomplish that goal under current circumstances?
c. Compute the cost of producing using only overtime and shortages (if necessary). No inventory.
d. Which alternative is better? Discuss.
e. Assume that it costs $1000 to hire a person and that person is added permanently to the workforce. How would this change the above answers?