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Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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Transcribed Image Text:Fall
Winter
Spring
Summer
Straight time
Overtime
Inventory
Backorder
Hiring
Layoff
Total
Annual cost
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Transcribed Image Text:Develop a production plan and calculate the annual cost for a firm whose demand forecast is fall, 9,700; winter, 8,000; spring, 7,000;
summer, 11,700. Inventory at the beginning of fall is 485 units. At the beginning of fall you currently have 35 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, $80 for each temp; layoff, $160 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. In each quarter, produce to
the full output of your regular workforce, even if that results in excess production. In Winter and Spring, use overtime only if needed to
meet the production required in that quarter. Do not use overtime to build excess inventory in prior seasons expressly for the purpose
of reducing the number of temp workers in Summer. (Leave no cells blank - be certain to enter "O" wherever reguired, Negative
values should he indicatod bu
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