1. Vega computers is a subdivision of a major computer manufacturer. Managers of Vega computers is making production plans for the coming year. Customer demand forecast for Vega computers is given in the table below.

Month	Demand
January	60,000
February	40,000
March	45,000
April	50,000
May	60,000
June	60,000
July	65,000
August	75000
September	60,000
October	55,000
November	90,000
December	100,000

Vega computers assembly the parts made by its suppliers in the production process. Production capacity is governed by the number of the employees on the production line. The production capacity operates for 20 days a month, 8 hours each day. To assemble a computer, one employee needs 15 minutes. Hourly wage for assembly line employees is $30. When employees work for overtime, they are paid 50% more than the normal wage. The production facility has 100 employees on the assembly line. Component costs for each computer is $200. Inventory carrying cost per computer per month is $5. Due to the difficulty of finding qualified workers, Vega computers has a no-layoff policy in place. Labor union rules enforce the overtime per employee to 20 hours per month. In the beginning of the next calendar year, the starting inventory will be 5,000 units. At the end of the planning year, Vega computers wants to carry 5,000 units of inventory to the next year.

Using the aggregate planning principles, a Linear Programming model for Vega computers production planning has been implemented in Excel. (See the Excel file named LOGM Assignment 06.xlsx). Using the Excel template for production planning, answer following questions.

1. What is the optimum production schedule? What is the annual cost of this schedule? (Assume no stock outs is allowed, no subcontracting, and no new hires). What is the average cost per unit for this production schedule?

2. Is there any value for management to negotiate an increase of allowed overtime per employee per month from 20 hours to 30 hours? Explain your answer with analytical reasoning. (Hint: make the decision based on the cost per unit).

Change the Maximum overtime per worker per month (E16) in Data worksheet.

3. If Vega computers has 120 employees, does negotiating an increase in overtime hours important? Explain your answer (with analytical reasoning).

4. Reconsider the original scenario where Vega computers has 100 employees and number of overtime hours per employee is 20 hours. Vega computers has found a third-party contractor who offered to provide the assembled computers for $220 per unit. (This includes the component cost of $200 per unit). Due to the capacity limitations of the contractor, only 10,000 computers can be subcontracted per month. Should Vega computers use the third-party contractor? Provide analytical reasoning for your answer.

5. Reconsider the original scenario where Vega computers has 100 employees and number of overtime hours per employee is 20 hours. Assume that subcontracting is not an option. Vega computers has a team of 50 people who are willing to work as seasonal employees. The cost of bringing them on is $750 per employee and the layoff cost is $1000 per employe Should Vega computers consider using a temporary workforce? Provide analytical reasoning for your answer.