Reference no: EM131696684

During the next three months a company faces the following demands for its product: month 1: 150; month 2: 250; month 3: 75. During any month a worker can produce up to 15 units of the product. Each worker is paid $5000 per month. The cost to hire a worker is $4000 and the cost to fire (layoff) a worker is $3000. The cost to hold one unit of the product in inventory is $100. Demand can be backlogged at a cost of $70 per unit per month. For example, if one unit is demanded in period 1 but that demand is not met until period 3 then a backlog cost of $140 (2*$70) is incurred. At the beginning of the month the company has 8 workers. During any month at most 2 workers can be hired. By the end of month 3 all demand must be met (no backlog allowed at the end of the third month). The raw material cost to produce one unit of the product is $300. How should the company schedule production to minimize total costs?