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Mity-Lite (ML) is a manufacturer of folding and stackable chairs and folding tables for social events. The demand for ML's products is seasonal, peaking in
Mity-Lite (ML) is a manufacturer of folding and stackable chairs and folding tables for social events. The demand for ML's products is seasonal, peaking in spring and summer. Suppose it is December now, and the production manager needs to prepare the production plan for the next 12 months (for simplicity we use four quarters). Also for simplicity, we aggregate all products. The forecast during each of the next four quarters is: Q1 Q2 Q3 Q4 141,330 242,550 217,866 129,900 ML currently employs 348 "permanent" workers. The workers are paid $10 per hour and work 480 hours a quarter. The workers can make approximately 167,040 units per quarter during regular time (10 hours a day, four days a week). (Note: This works out to one hour per unit per worker.) They can also work up to 25 percent more as overtime (i.e., work 10 hours more on Fridays) and will be paid 1.5 times the regular wage rate. ML can hire up to 200 temporary workers for a second shift. The average hiring cost (searching, interviewing, and training) is estimated to be $480 per new employee. (Note: Hiring cost is charged to each unit produced during the first quarter of employment.)
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