FlexMan is an electronic manufacturer,to produce two products, routers and switches.

Demand forecast (000')for each in V5.P242Table 8-10. Manufacturing is primarily an assembly operation. Capacity is governed by () the number of people on the production line. The plant operates20days a month,8hours each day.Production of arouter takes20minutes, and production of aswitch requires10minutesof worker time. Eachworker is paid$10per hourwith a50percent premium() for any overtime. The plantcurrently has6,300employees. Overtimeis limited to20hoursper employee per month. The plant currentlymaintains100,000routersand50,000switchesin inventory. The Cost of holding arouter in inventory is$2per month, and the cost of holding aswitch in inventory is$1per month.

(:maintains:Router=Router100,000;Switch=Switch50,000)

The holding cost arises because products are paid for by the customer at existing market rates when purchased. Thus, if FlexMan produce early and holds in inventory, the company recovers less given the rapidly dropping component prices.