The Whoareyoukidding TV Company has just completed the demand forecast for their 85-inch TV for the next year. The demand forecast is:

The following policies are in place:
.. They are not allowed to use overtime to build inventory .. They must use the maximum overtime before they can hire a new person .. They must stop all overtime before they let any employee go .. They must fill all customer demand (no stockouts)
The other data about the company:
.. Each employee can produce 25 TVs per quarter .. The hire cost is $3,000 • The fire cost is $5,000 • The extra cost to produce one unit on overtime is $300 • The inventory cost is $40 per unit per quarter based on the number of units in inventory at the end of the quarter .. The maximum overtime is five units per quarter per employee • There are now 11 employees .. There are now 20 units in inventory

a. Develop a plan that uses HirelFire with minimal inventory. Determine the extra cost (above normal cost of labor, materials, and overhead).

b. Develop a plan that hires employees only at the beginning of the first quarter, and after that neither hires nor fires anyone. All demand is met using overtime and inventory. Again, determine the extra cost of that plan.

Transcribed Image Text:

Quarter Demand 1 350 234 2 480 400 370