4. Mischief Company had been experimenting with various sales and operations plans. As the firm started to lay out plans for next year, management decided to use a four-month planning horizon to reduce computation cost. The firm’s basic data were:

Employment level for this December ???? 20 people.

Demand forecast for January of next year ???? 200.

Demand forecast for February of next year ???? 220.

Demand forecast for March of next year ???? 200.

Demand forecast for April of next year ???? 220.

Inventory level planned for the end of this December ???? 0.

Back orders aren’t allowed in the plan.

Desired April ending inventory ???? 0.

Regular time per month ???? $2,000 per worker-month.

Production ???? 10 units/person/month.

Overtime premium ???? 50 percent of regular time.

Overtime limit ???? 25 percent of regular time per person per month.

Inventory carrying cost ???? $150/month/unit (on the average per month).

Hiring (or firing) cost ???? $2,000 per person.

Use a spreadsheet model to compare the cost of a fixed employment production plan (i.e., 20 people)

that uses overtime to meet demand to a level production plan that uses no overtime to meet production.