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MyPhone a major cell phone manufacturer, is making production plans for the coming year. The firm has worked with its customers (the service providers) to come up with forecasts of monthly requirements (in thousands of phones) as shown in the following table:

Month	Demand (000)	Month	Demand (000)
January	1,000	July	1,600
February	800	August	1900
March	975	September	850
April	900	October	800
May	1000	November	1,400
June	1,600	December	1,700

Manufacturing is primarily an assembly operation, and capacity is governed by the number of people on the production line. The plant operates 20 days a month, eight hours a day. One person can assemble a phone every ten minutes. Workers are paid $20 per hour and a 50 percent premium for overtime. The plant currently employs 1250 workers. Component costs for each cell phone amounts to $20. Given the rapid decline in component and finished goods prices, carrying inventory from one month to the next incurs a cost of $6 per phone per month. The company currently has a hiring freeze and a no-layoff policy in place. Overtime is limited to a maximum of 15 hours per month per employee. Assume the company has a starting inventory of 30,000 units and wants to end the year at the same level.

1. Assuming no backlogs and no subcontracting, what is the optimal production schedule and its cost.
2. Assume that a third party has agreed to produce cell phones as needed at a cost of $26 (this includes the component cost). Will this change your schedule from above.