The HiTech company produces Blu-Ray disc players. Estimated demands for the next four quarters are 5000, 10,000,
Question:
The HiTech company produces Blu-Ray disc players. Estimated demands for the next four quarters are 5000, 10,000, 8000, and 2000. At the beginning of quarter 1, HiTech has 60 workers. It costs $2000 to hire a worker and $4000 to fire a worker. Workers are paid $10,000 per quarter plus $80 for each unit they make during overtime. A new hire can make up to 60 units per quarter during regular-time, whereas a previously hired worker can make up to 90 units per quarter. Any worker can make up to 20 units per quarter during overtime. Each disc player is sold for $160. It costs $20 to hold a disc player in inventory for a quarter. Assume workers are hired and fired at the beginning of each quarter and that all of a quarter’s production is available to meet demand for that quarter. Initial inventory at the beginning of quarter 1 is 1000 disc players. How can the company maximize its profit? Assume that demand is lost if insufficient stock is available. That is, there is no backlogging of demand (and there is no requirement that HiTech must satisfy all of its demand).
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