Reference no: EM131692130

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 = $165/month/unit (on the average per month). Hiring (or firing) cost = $2,055 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.