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John Smith has a small farm in San Diego, California, that produces plums. The plums are dried on the location and sold to a variety

John Smith has a small farm in San Diego, California, that produces plums. The plums are dried on the
location and sold to a variety of supermarkets. Based on mathematical models, he forecasts that sales over
the next 6 quarters in thousands of packages will be as follows:
Assume that each worker stays on the job for at least one quarter, and that Smith currently has three
workers on the payroll. He calculates that he will have 18,000 packages on hand at the end of the current
quarter and wants to keep a safety stock of 9,500 packages at the end of the sixth quarter. Assume that, on
average, each worker is paid $21,000 per quarter and is responsible for producing 32,000 packages.
Inventory costs are estimated to be 5 cents per package per quarter, and shortages are not allowed. Based
on the effort of interviewing and training new workers, Farmer Smith estimates that it costs $600 for each
worker hired. Severance pay amounts to $800 per worker.
a. Determine the level output/workforce plan that he will need over the next 6 quarters.
b. Evaluate the total cost of the plan found in part a.
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