Question
Mike Blanford, the master scheduler at General Avionics, has the following sales forecast for the next six months for one line in his factory: 5000,
Mike Blanford, the master scheduler at General Avionics, has the following sales forecast for the next six months for one line in his factory: 5000, 10000, 8000, 2000, 8500, 7500, 11000, 3000Working days of the six months are 23, 25, 24, 20, 22, 23, 21, 20 Forecasted 7th-month sale is 9000 units with 22 days working time. At the beginning of month 1, there are 1,000 units in inventory. The firm has prepared the following data: Hiring cost per employee = $200 Firing cost per employee = $400 Beginning workforce = 60 employees Inventory carrying cost = $2 per unit per month of ending inventory Stock-out cost = $5 per unit Regular payroll = $1,200 per employee per month Overtime cost = $2 per unit Each employee can produce 100 units per month. Demand not satisfied in any month is lost and incurs a stock-out penalty. If Mike produces at chase strategy to meet demand each month, with 5 days of supply inventories at the end of the month and no overtime, how much will he produce each month, and what is the overall cost? Calculate production amounts and costs for a level rate of output with no ending inventory. In this case, allow items to be back-ordered. When this occurs, a $5 penalty is incurred.
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