Skycell, a major European cell phone manufacturer, is making production plans for the coming year. Skycell has worked with its customers (the service providers) to come up with forecasts of monthly requirements (in thousands of phones) as shown in the attached Excel file.

Assuming no backlogs, no subcontracting, and no new hires, what is the optimum production schedule? What is the annual cost of this schedule?

Is there any value for management to negotiate an increase of allowed overtime per employee per month from 50 hours to 80?

Reconsider parts (a) and (b) if Skycell starts with only 1,200 employees. Reconsider parts (a) and (b) if Skycell starts with 1,800 employees. What happens to the value of additional overtime as the workforce size decreases?

Skycell currently has a no-layoff policy in place.
Month	20	days
Day	8	hours
Production rate	15	phones	per hour	per worker
Regular time labor cost	25	euros	per hour	per worker
Overtime labor cost	37.5	euros	per hour	per worker
Plant	1,500	workers
Component costs	20	euros	per cell phone
Inventory carrying cost	4	euros	per cell phone	per month
Overtime limit	50	hours	per month	per employee
Starting inventory	50,000
Ending inventory	50,000

Month	Demand
January	900,000
February	1,100,000
March	1,100,000
April	1,200,000
May	1,500,000
June	1,600,000
July	1,600,000
August	1,900,000
September	1,100,000
October	1,800,000
November	1,400,000
December	1,700,000
Annual	16,900,000