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A small company produces recreational vehicles. The marketing manager has developed the follo w ing forecasts (in units):
Month Mar Apr May Jun Jul Aug Sep Total
Forecast 50 44 55 60 60 40 50 359
Use the following information:
Regular labour cost $240 per unit Overtime labour cost $360 per unit Regular capacity 40 units per month, using 5 workers Overtime capacity 8 units per month Holding cost $30 per unit per month Backorder cost $100 per unit per month Beginning inventory 0 Desired ending inventory 0 Hiring cost $2,000 per worker
Develop the minimum cost plan and compute its total cost. Hint: Hire 8 new workers and meet any shortages with overtime.
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