Cooltoys demand for their product mix for the upcoming year is given as follows:

Month Demand January 2700 February 2520 March 2880 April 2340

May 1980 June 3780 July 3600 August 1980 September 3960 October 3960 November 3420 December 2960

The company has a starting inventory in January of 1,500 toys. At the beginning of January, the company has a workforce of 60 employees. The plant has a total of 20 working days in each month, and each employee works eight hours per day on straight time and the rest on overtime. The capacity of the production operation is determined primarily by the total labor hours worked. Because of labor rules, no employee works more than 10 hours of overtime per month. Aggregate costs are:

Item Cost Material cost $13/unit Inventory holding cost $2/unit/month Marginal cost of stockout/backlog $5/unit/month Hiring and training costs $400/worker Layoff cost $600/workers

Labor hours required 4/unit

Regular time cost $6/hour

Overtime cost $9/hour

Cost of subcontracting $60/unit

*There are no limits on subcontracting, inventories, and stockouts/backlog.

*All stockouts are backlogged and supplied from the following months production.

*Inventory costs are incurred on the ending inventory in the month.

*The supply chain managers goal is to obtain the optimal aggregate plan that allows the manufacturer to end December with at least 500 units meeting all demand.

a. Assuming no backlogs, no subcontracting, and no new hires, what is the optimum production schedule? What is the annual cost of this schedule? What is the profit when selling price is $95? b. How would the optimal aggregate plan change if hiring-training cost was $40, and layoff cost was $60? What is the new total cost and profit?