need help with operations management

Discussion in 'General Discussions' started by imperialdarknes, Mar 3, 2012.

  1. imperialdarknes

    imperialdarknes Level III

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    The forecast demand for aggregate units of chairs in the next three quarters is: Q1: 8900, Q2:
    9700, and Q3: 8600. There are currently 30 permanent workers. Each worker can make 300
    chairs per quarter. The regular production cost is $20 per chair. The holding cost per unit per
    quarter is $2, and the backorder cost per unit per quarter is $8. The manager wants to keep a
    minimum of 30 workers at all times, and he has the option to hire any number of workers for
    the hiring cost of $1200 per worker. Assuming that the newly hired worker will be laid off by
    the end of the third quarter (at the latest), the layoff cost will be $600 per worker. Overtime by
    full-time workers is possible at $25 per unit up to a maximum of 20 percent of regular time
    production. Current inventory level is zero, but the manager wants to have at least 400 units in
    inventory at the end of the third quarter. Find the aggregate production plan that minimizes
    total cost. Assume that when a worker is hired, they will produce exactly equal to the maximum
    capacity that they have (i.e. 300 units per worker per quarter).